Switch to:
Hospira Inc (NYSE:HSP)
Gross Profit
$1,587 Mil (TTM As of Dec. 2014)

Hospira Inc's gross profit for the three months ended in Dec. 2014 was $386 Mil. Hospira Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was $1,587 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Hospira Inc's gross profit for the three months ended in Dec. 2014 was $386 Mil. Hospira Inc's revenue for the three months ended in Dec. 2014 was $1,127 Mil. Therefore, Hospira Inc's Gross Margin for the quarter that ended in Dec. 2014 was 34.23%.

Hospira Inc had a gross margin of 34.23% for the quarter that ended in Dec. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Hospira Inc was 38.66%. The lowest was 26.72%. And the median was 34.16%.

Warning Sign:

Hospira Inc gross margin has been in long term decline. The average rate of decline per year is -4.4%.


Definition

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

Hospira Inc's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=4463.7 - 2877.2
=1,587

Hospira Inc's Gross Profit for the quarter that ended in Dec. 2014 is calculated as

Gross Profit (Q: Dec. 2014 )=Revenue - Cost of Goods Sold
=1126.5 - 740.9
=386

Hospira Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 369.6 (Mar. 2014 ) + 400 (Jun. 2014 ) + 431.3 (Sep. 2014 ) + 385.6 (Dec. 2014 ) = $1,587 Mil.

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

Hospira Inc's Gross Margin for the quarter that ended in Dec. 2014 is calculated as

Gross Margin (Q: Dec. 2014 )=Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=386 / 1126.5
=34.23 %

* 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

Hospira Inc had a gross margin of 34.23% for the quarter that ended in Dec. 2014 => 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 own currency.

Hospira Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 8499391,1741,3221,4561,5141,3981,1131,0811,587

Hospira Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Gross_Profit 214316150319290322370400431386
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK