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GuruFocus has detected 2 Warning Signs with Starbucks Corp \$FRA:SRB.
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Starbucks Corp (FRA:SRB)
Gross Profit
€11,846 Mil (TTM As of Dec. 2016)

Starbucks Corp's gross profit for the three months ended in Dec. 2016 was €3,259 Mil. Starbucks Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was €11,846 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Starbucks Corp's gross profit for the three months ended in Dec. 2016 was €3,259 Mil. Starbucks Corp's revenue for the three months ended in Dec. 2016 was €5,435 Mil. Therefore, Starbucks Corp's Gross Margin for the quarter that ended in Dec. 2016 was 59.97%.

Starbucks Corp had a gross margin of 59.97% for the quarter that ended in Dec. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Starbucks Corp was 60.23%. The lowest was 23.34%. And the median was 57.53%.

Definition

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

Starbucks Corp's Gross Profit for the fiscal year that ended in Sep. 2016 is calculated as

 Gross Profit (A: Sep. 2016 ) = Revenue - Cost of Goods Sold = 18993.0499866 - 7583.62291722 = 11,409

Starbucks Corp's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 5434.54355863 - 2175.56166461 = 3,259

Starbucks Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 2678.60991379 (Mar. 2016 ) + 2828.14168743 (Jun. 2016 ) + 3080.28156464 (Sep. 2016 ) + 3258.98189402 (Dec. 2016 ) = €11,846 Mil.

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

Starbucks Corp'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 = 3,259 / 5434.54355863 = 59.97 %

* 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

Starbucks Corp had a gross margin of 59.97% for the quarter that ended in Dec. 2016 => Durable 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.

Starbucks Corp Annual Data

 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Sep16 Gross_Profit 1,579 3,999 3,739 4,800 4,933 5,791 6,346 7,441 10,136 11,409

Starbucks Corp Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 1,907 2,281 2,498 2,608 2,613 2,926 2,679 2,828 3,080 3,259
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