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Hovnanian Enterprises Inc (NYSE:HOV)
Gross Profit
$374 Mil (TTM As of Oct. 2014)

Hovnanian Enterprises Inc's gross profit for the three months ended in Oct. 2014 was $119 Mil. Hovnanian Enterprises Inc's gross profit for the trailing twelve months (TTM) ended in Oct. 2014 was $374 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Hovnanian Enterprises Inc's gross profit for the three months ended in Oct. 2014 was $119 Mil. Hovnanian Enterprises Inc's revenue for the three months ended in Oct. 2014 was $698 Mil. Therefore, Hovnanian Enterprises Inc's Gross Margin for the quarter that ended in Oct. 2014 was 17.05%.

Hovnanian Enterprises Inc had a gross margin of 17.05% for the quarter that ended in Oct. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Hovnanian Enterprises Inc was 26.42%. The lowest was -37.36%. And the median was 19.85%.


Definition

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

Hovnanian Enterprises Inc's Gross Profit for the fiscal year that ended in Oct. 2014 is calculated as

Gross Profit (A: Oct. 2014 )=Revenue - Cost of Goods Sold
=2063.38 - 1703.005
=360

Hovnanian Enterprises Inc's Gross Profit for the quarter that ended in Oct. 2014 is calculated as

Gross Profit (Q: Oct. 2014 )=Revenue - Cost of Goods Sold
=698.394 - 579.298
=119

Hovnanian Enterprises Inc Gross Profit for the trailing twelve months (TTM) ended in Oct. 2014 was 65.007 (Jan. 2014 ) + 86.567 (Apr. 2014 ) + 103.084 (Jul. 2014 ) + 119.096 (Oct. 2014 ) = $374 Mil.

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

Hovnanian Enterprises Inc's Gross Margin for the quarter that ended in Oct. 2014 is calculated as

Gross Margin (Q: Oct. 2014 )=Gross Profit (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=119 / 698.394
=17.05 %

* 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

Hovnanian Enterprises Inc had a gross margin of 17.05% for the quarter that ended in Oct. 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.

Hovnanian Enterprises Inc Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Gross_Profit 1,4131,407183-559-5962523215323360

Hovnanian Enterprises Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Gross_Profit 6758596994956587103119
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