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GuruFocus has detected 1 Warning Sign with Express Scripts Holding Co \$ESRX.
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Express Scripts Holding Co (NAS:ESRX)
Gross Profit
\$8,621 Mil (TTM As of Dec. 2016)

Express Scripts Holding Co's gross profit for the three months ended in Dec. 2016 was \$2,338 Mil. Express Scripts Holding Co's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$8,621 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Express Scripts Holding Co's gross profit for the three months ended in Dec. 2016 was \$2,338 Mil. Express Scripts Holding Co's revenue for the three months ended in Dec. 2016 was \$24,863 Mil. Therefore, Express Scripts Holding Co's Gross Margin for the quarter that ended in Dec. 2016 was 9.40%.

Express Scripts Holding Co had a gross margin of 9.40% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Express Scripts Holding Co was 9.80%. The lowest was 6.58%. And the median was 8.06%.

Definition

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

Express Scripts Holding Co'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 = 100287.5 - 91667 = 8,621

Express Scripts Holding Co's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 24863.3 - 22525.1 = 2,338

Express Scripts Holding Co Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 1847 (Mar. 2016 ) + 2161.2 (Jun. 2016 ) + 2274.1 (Sep. 2016 ) + 2338.2 (Dec. 2016 ) = \$8,621 Mil.

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

Express Scripts Holding Co'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 = 2,338 / 24863.3 = 9.40 %

* 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

Express Scripts Holding Co had a gross margin of 9.40% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

Related Terms

Historical Data

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

Express Scripts Holding Co Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 1,767 2,041 2,424 2,958 3,210 7,312 8,132 7,925 8,402 8,621

Express Scripts Holding Co Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 2,073 2,094 1,834 2,131 2,174 2,263 1,847 2,161 2,274 2,338
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