Switch to:
Encana Corp (NYSE:ECA)
Gross Profit
$3,986 Mil (TTM As of Mar. 2015)

Encana Corp's gross profit for the three months ended in Mar. 2015 was $580 Mil. Encana Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2015 was $3,986 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Encana Corp's gross profit for the three months ended in Mar. 2015 was $580 Mil. Encana Corp's revenue for the three months ended in Mar. 2015 was $1,249 Mil. Therefore, Encana Corp's Gross Margin for the quarter that ended in Mar. 2015 was 63.09%.

Encana Corp had a gross margin of 63.09% for the quarter that ended in Mar. 2015 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Encana Corp was 68.69%. The lowest was 42.78%. And the median was 56.18%.

Warning Sign:

Encana Corp gross margin has been in long term decline. The average rate of decline per year is -3.9%.


Definition

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

Encana Corp's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=8019 - 2696
=5,323

Encana Corp's Gross Profit for the quarter that ended in Mar. 2015 is calculated as

Gross Profit (Q: Mar. 2015 )=Revenue - Cost of Goods Sold
=1249 - 461
=788

Encana Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2015 was 835 (Jun. 2014 ) + 1234 (Sep. 2014 ) + 1337 (Dec. 2014 ) + 580 (Mar. 2015 ) = $3,986 Mil.

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

Encana Corp's Gross Margin for the quarter that ended in Mar. 2015 is calculated as

Gross Margin (Q: Mar. 2015 )=Gross Profit (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=788 / 1249
=63.09 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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

Encana Corp had a gross margin of 63.09% for the quarter that ended in Mar. 2015 => 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 own currency.

Encana Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 8,13110,8139,28414,4626,5765,9875,4402,6812,9484,455

Encana Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Gross_Profit 9843541,2816916221,0498351,2341,337580
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK