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GuruFocus has detected 5 Warning Signs with Harley-Davidson Inc $HOG.
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Harley-Davidson Inc (NYSE:HOG)
Gross Profit
$2,403 Mil (TTM As of Dec. 2016)

Harley-Davidson Inc's gross profit for the three months ended in Dec. 2016 was $422 Mil. Harley-Davidson Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $2,403 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Harley-Davidson Inc's gross profit for the three months ended in Dec. 2016 was $422 Mil. Harley-Davidson Inc's revenue for the three months ended in Dec. 2016 was $1,111 Mil. Therefore, Harley-Davidson Inc's Gross Margin for the quarter that ended in Dec. 2016 was 38.00%.

Harley-Davidson Inc had a gross margin of 38.00% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Harley-Davidson Inc was 41.32%. The lowest was 33.40%. And the median was 38.75%.


Definition

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

Harley-Davidson Inc'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
=5996.458 - 3593.466
=2,403

Harley-Davidson Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=1110.6 - 688.583
=422

Harley-Davidson Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 717.719 (Mar. 2016 ) + 755.627 (Jun. 2016 ) + 507.629 (Sep. 2016 ) + 422.017 (Dec. 2016 ) = $2,403 Mil.

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

Harley-Davidson Inc'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
=422 / 1110.6
=38.00 %

* 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

Harley-Davidson Inc had a gross margin of 38.00% for the quarter that ended in Dec. 2016 => 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 local exchange's currency.

Harley-Davidson Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 2,1142,3081,5971,8381,9762,1622,3382,5212,4772,403

Harley-Davidson Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 526438714780530453718756508422
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