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Hormel Foods Corp (NYSE:HRL)
Gross Profit
$2,055 Mil (TTM As of Jul. 2016)

Hormel Foods Corp's gross profit for the three months ended in Jul. 2016 was $475 Mil. Hormel Foods Corp's gross profit for the trailing twelve months (TTM) ended in Jul. 2016 was $2,055 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Hormel Foods Corp's gross profit for the three months ended in Jul. 2016 was $475 Mil. Hormel Foods Corp's revenue for the three months ended in Jul. 2016 was $2,302 Mil. Therefore, Hormel Foods Corp's Gross Margin for the quarter that ended in Jul. 2016 was 20.64%.

Hormel Foods Corp had a gross margin of 20.64% for the quarter that ended in Jul. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Hormel Foods Corp was 22.84%. The lowest was 15.72%. And the median was 16.86%.


Definition

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

Hormel Foods Corp's Gross Profit for the fiscal year that ended in Oct. 2015 is calculated as

Gross Profit (A: Oct. 2015 )=Revenue - Cost of Goods Sold
=9263.863 - 7455.282
=1,809

Hormel Foods Corp's Gross Profit for the quarter that ended in Jul. 2016 is calculated as

Gross Profit (Q: Jul. 2016 )=Revenue - Cost of Goods Sold
=2302.376 - 1827.091
=475

Hormel Foods Corp Gross Profit for the trailing twelve months (TTM) ended in Jul. 2016 was 495.03 (Oct. 2015 ) + 558.011 (Jan. 2016 ) + 526.359 (Apr. 2016 ) + 475.285 (Jul. 2016 ) = $2,055 Mil.

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

Hormel Foods Corp's Gross Margin for the quarter that ended in Jul. 2016 is calculated as

Gross Margin (Q: Jul. 2016 )=Gross Profit (Q: Jul. 2016 ) / Revenue (Q: Jul. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=475 / 2302.376
=20.64 %

* 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

Hormel Foods Corp had a gross margin of 20.64% for the quarter that ended in Jul. 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.

Hormel Foods Corp Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Gross_Profit 1,4151,0621,0991,2391,3341,3321,4131,5651,8092,158

Hormel Foods Corp Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Gross_Profit 364424445460409495558526475599
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