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GuruFocus has detected 1 Warning Sign with H&R Block Inc $HRB.
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H&R Block Inc (NYSE:HRB)
Gross Profit
$1,327 Mil (TTM As of Jan. 2017)

H&R Block Inc's gross profit for the three months ended in Jan. 2017 was $63 Mil. H&R Block Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was $1,327 Mil.

Gross Margin is calculated as gross profit divided by its revenue. H&R Block Inc's gross profit for the three months ended in Jan. 2017 was $63 Mil. H&R Block Inc's revenue for the three months ended in Jan. 2017 was $452 Mil. Therefore, H&R Block Inc's Gross Margin for the quarter that ended in Jan. 2017 was 13.96%.

H&R Block Inc had a gross margin of 13.96% for the quarter that ended in Jan. 2017 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of H&R Block Inc was 48.01%. The lowest was 36.30%. And the median was 40.43%.


Definition

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

H&R Block Inc's Gross Profit for the fiscal year that ended in Apr. 2016 is calculated as

Gross Profit (A: Apr. 2016 )=Revenue - Cost of Goods Sold
=3038.153 - 1685.552
=1,353

H&R Block Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

Gross Profit (Q: Jan. 2017 )=Revenue - Cost of Goods Sold
=451.882 - 388.777
=63

H&R Block Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 1444.347 (Apr. 2016 ) + -85.901 (Jul. 2016 ) + -94.37 (Oct. 2016 ) + 63.105 (Jan. 2017 ) = $1,327 Mil.

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

H&R Block Inc's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

Gross Margin (Q: Jan. 2017 )=Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=63 / 451.882
=13.96 %

* 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

H&R Block Inc had a gross margin of 13.96% for the quarter that ended in Jan. 2017 => 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 local exchange's currency.

H&R Block Inc Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
Gross_Profit 1,5131,4981,4871,4061,1681,1921,3751,4521,4481,353

H&R Block Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Gross_Profit -871141,485-76-98821,444-86-9463
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