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Express Scripts (NAS:ESRX)
Gross Profit
$7,813 Mil (TTM As of Jun. 2014)

Express Scripts's gross profit for the three months ended in Jun. 2014 was $2,008 Mil. Express Scripts's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $7,813 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Express Scripts's gross profit for the three months ended in Jun. 2014 was $2,008 Mil. Express Scripts's revenue for the three months ended in Jun. 2014 was $25,111 Mil. Therefore, Express Scripts's Gross Margin for the quarter that ended in Jun. 2014 was 8.00%.

Express Scripts had a gross margin of 8.00% for the quarter that ended in Jun. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Express Scripts was 12.97%. The lowest was 6.25%. And the median was 8.48%.

Warning Sign:

Express Scripts gross margin has been in long term decline. The average rate of decline per year is -4.2%.


Definition

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

Express Scripts's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=104098.8 - 95966.4
=8,132

Express Scripts's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=25111 - 23103.3
=2,008

Express Scripts Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 1994.2 (Sep. 2013 ) + 2061 (Dec. 2013 ) + 1750.4 (Mar. 2014 ) + 2007.7 (Jun. 2014 ) = $7,813 Mil.

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

Express Scripts's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,008 / 25111
=8.00 %

* 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

Express Scripts had a gross margin of 8.00% for the quarter that ended in Jun. 2014 => 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 own currency.

Express Scripts Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 9441,1991,4971,7672,0412,4302,9583,2107,3308,132

Express Scripts Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 8322,1132,1352,2511,9672,1181,9942,0611,7502,008
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