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Home Inns & Hotels Management, Inc. (NAS:HMIN)
Gross Profit
$153.4 Mil (TTM As of Dec. 2013)

Home Inns & Hotels Management, Inc.'s gross profit for the three months ended in Dec. 2013 was $38.6 Mil. Home Inns & Hotels Management, Inc.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $153.4 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Home Inns & Hotels Management, Inc.'s gross profit for the three months ended in Dec. 2013 was $38.6 Mil. Home Inns & Hotels Management, Inc.'s revenue for the three months ended in Dec. 2013 was $249.7 Mil. Therefore, Home Inns & Hotels Management, Inc.'s Gross Margin for the quarter that ended in Dec. 2013 was 15.44%.

Home Inns & Hotels Management, Inc. had a gross margin of 15.44% for the quarter that ended in Dec. 2013 => No sustainable competitive advantage

During the past 12 years, the highest Gross Margin of Home Inns & Hotels Management, Inc. was 51.98%. The lowest was 11.99%. And the median was 23.74%.

Warning Sign:

Home Inns & Hotels Management, Inc. gross margin has been in long term decline. The average rate of decline per year is -6.8%.


Definition

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

Home Inns & Hotels Management, 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
=985.151214675 - 830.319781854
=154.8

Home Inns & Hotels Management, 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
=249.742687159 - 211.182449182
=38.6

Home Inns & Hotels Management, Inc. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 15.2258325251 (Mar. 2013 ) + 44.4819041409 (Jun. 2013 ) + 55.1397673275 (Sep. 2013 ) + 38.5602379772 (Dec. 2013 ) = $153.4 Mil.

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

Home Inns & Hotels Management, 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
=38.6 / 249.742687159
=15.44 %

* 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

Home Inns & Hotels Management, Inc. had a gross margin of 15.44% for the quarter that ended in Dec. 2013 => 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.

Home Inns & Hotels Management, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 5.716.519.431.238.366.3114.8107.3104.4154.8

Home Inns & Hotels Management, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 35.60.013.032.238.722.815.244.555.138.6
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