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Fortune Brands Home & Security Inc (NYSE:FBHS)
Gross Profit
$1,439 Mil (TTM As of Dec. 2013)

Fortune Brands Home & Security Inc's gross profit for the three months ended in Dec. 2013 was $377 Mil. Fortune Brands Home & Security Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $1,439 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Fortune Brands Home & Security Inc's gross profit for the three months ended in Dec. 2013 was $377 Mil. Fortune Brands Home & Security Inc's revenue for the three months ended in Dec. 2013 was $1,102 Mil. Therefore, Fortune Brands Home & Security Inc's Gross Margin for the quarter that ended in Dec. 2013 was 34.19%.

Fortune Brands Home & Security Inc had a gross margin of 34.19% for the quarter that ended in Dec. 2013 => Competition eroding margins

During the past 5 years, the highest Gross Margin of Fortune Brands Home & Security Inc was 34.61%. The lowest was 29.94%. And the median was 32.58%.


Definition

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

Fortune Brands Home & Security Inc'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
=4157.4 - 2718.6
=1,439

Fortune Brands Home & Security Inc's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=1101.9 - 725.2
=377

Fortune Brands Home & Security Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 300.2 (Mar. 2013 ) + 377 (Jun. 2013 ) + 384.9 (Sep. 2013 ) + 376.7 (Dec. 2013 ) = $1,439 Mil.

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

Fortune Brands Home & Security Inc's Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=377 / 1101.9
=34.19 %

* 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

Fortune Brands Home & Security Inc had a gross margin of 34.19% for the quarter that ended in Dec. 2013 => Competition eroding margins


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.

Fortune Brands Home & Security Inc Annual Data

Dec09Dec10Dec11Dec12Dec13
Gross_Profit 000009031,0569971,1701,439

Fortune Brands Home & Security Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 256239247317302304300377385377
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