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GuruFocus has detected 5 Warning Signs with Carrizo Oil & Gas Inc $CRZO.
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Carrizo Oil & Gas Inc (NAS:CRZO)
Gross Profit
$320.3 Mil (TTM As of Dec. 2016)

Carrizo Oil & Gas Inc's gross profit for the three months ended in Dec. 2016 was $108.5 Mil. Carrizo Oil & Gas Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $320.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Carrizo Oil & Gas Inc's gross profit for the three months ended in Dec. 2016 was $108.5 Mil. Carrizo Oil & Gas Inc's revenue for the three months ended in Dec. 2016 was $143.8 Mil. Therefore, Carrizo Oil & Gas Inc's Gross Margin for the quarter that ended in Dec. 2016 was 75.41%.

Carrizo Oil & Gas Inc had a gross margin of 75.41% for the quarter that ended in Dec. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Carrizo Oil & Gas Inc was 85.52%. The lowest was 72.20%. And the median was 79.94%.

Warning Sign:

Carrizo Oil & Gas Inc gross margin has been in long term decline. The average rate of decline per year is -3.1%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Carrizo Oil & Gas Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=443.594 - 123.322
=320.3

Carrizo Oil & Gas Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=143.831 - 35.361
=108.5

Carrizo Oil & Gas Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 52.086 (Mar. 2016 ) + 79.133 (Jun. 2016 ) + 80.583 (Sep. 2016 ) + 108.47 (Dec. 2016 ) = $320.3 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Carrizo Oil & Gas Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=108.5 / 143.831
=75.41 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Carrizo Oil & Gas Inc had a gross margin of 75.41% for the quarter that ended in Dec. 2016 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Carrizo Oil & Gas Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 101.1172.282.4107.1164.5313.4444.8598.0312.2320.3

Carrizo Oil & Gas Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 164.6130.471.393.477.570.152.179.180.6108.5
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