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Helmerich & Payne, Inc. (NYSE:HP)
Gross Profit
$1,572 Mil (TTM As of Dec. 2013)

Helmerich & Payne, Inc.'s gross profit for the three months ended in Dec. 2013 was $415 Mil. Helmerich & Payne, Inc.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $1,572 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Helmerich & Payne, Inc.'s gross profit for the three months ended in Dec. 2013 was $415 Mil. Helmerich & Payne, Inc.'s revenue for the three months ended in Dec. 2013 was $889 Mil. Therefore, Helmerich & Payne, Inc.'s Gross Margin for the quarter that ended in Dec. 2013 was 46.69%.

Helmerich & Payne, Inc. had a gross margin of 46.69% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Helmerich & Payne, Inc. was 48.76%. The lowest was 29.09%. And the median was 42.83%.

Warning Sign:

Helmerich & Payne, Inc. gross margin has been in long term decline. The average rate of decline per year is -1.1%.


Definition

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

Helmerich & Payne, Inc.'s Gross Profit for the fiscal year that ended in Sep. 2013 is calculated as

Gross Profit (A: Sep. 2013 )=Revenue - Cost of Goods Sold
=3387.614 - 1852.768
=1,535

Helmerich & Payne, 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
=889.152 - 474.048
=415

Helmerich & Payne, Inc. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 376.572 (Mar. 2013 ) + 389.207 (Jun. 2013 ) + 391.366 (Sep. 2013 ) + 415.104 (Dec. 2013 ) = $1,572 Mil.

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

Helmerich & Payne, 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
=415 / 889.152
=46.69 %

* 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

Helmerich & Payne, Inc. had a gross margin of 46.69% for the quarter that ended in Dec. 2013 => Durable 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.

Helmerich & Payne, Inc. Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Gross_Profit 1713165637679508998031,1111,4011,535

Helmerich & Payne, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 304342322356382378377389391415
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