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GuruFocus has detected 1 Warning Sign with Brinker International Inc $EAT.
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Brinker International Inc (NYSE:EAT)
Gross Profit
$592 Mil (TTM As of Mar. 2017)

Brinker International Inc's gross profit for the three months ended in Mar. 2017 was $155 Mil. Brinker International Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $592 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Brinker International Inc's gross profit for the three months ended in Mar. 2017 was $155 Mil. Brinker International Inc's revenue for the three months ended in Mar. 2017 was $811 Mil. Therefore, Brinker International Inc's Gross Margin for the quarter that ended in Mar. 2017 was 19.09%.

Brinker International Inc had a gross margin of 19.09% for the quarter that ended in Mar. 2017 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Brinker International Inc was 72.08%. The lowest was 15.69%. And the median was 18.97%.


Definition

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

Brinker International Inc's Gross Profit for the fiscal year that ended in Jun. 2016 is calculated as

Gross Profit (A: Jun. 2016 )=Revenue - Cost of Goods Sold
=3257.489 - 2638.872
=619

Brinker International Inc's Gross Profit for the quarter that ended in Mar. 2017 is calculated as

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=810.641 - 655.907
=155

Brinker International Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 182.496 (Jun. 2016 ) + 118.977 (Sep. 2016 ) + 135.683 (Dec. 2016 ) + 154.734 (Mar. 2017 ) = $592 Mil.

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

Brinker International Inc's Gross Margin for the quarter that ended in Mar. 2017 is calculated as

Gross Margin (Q: Mar. 2017 )=Gross Profit (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=155 / 810.641
=19.09 %

* 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

Brinker International Inc had a gross margin of 19.09% for the quarter that ended in Mar. 2017 => No sustainable 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.

Brinker International Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
Gross_Profit 3,1553,034514455477509540560595619

Brinker International Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 143167162130147159182119136155
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