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GuruFocus has detected 1 Warning Sign with Jewett-Cameron Trading Co Ltd \$JCTCF.
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Jewett-Cameron Trading Co Ltd (NAS:JCTCF)
Gross Profit
\$9.84 Mil (TTM As of Feb. 2017)

Jewett-Cameron Trading Co Ltd's gross profit for the three months ended in Feb. 2017 was \$2.13 Mil. Jewett-Cameron Trading Co Ltd's gross profit for the trailing twelve months (TTM) ended in Feb. 2017 was \$9.84 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Jewett-Cameron Trading Co Ltd's gross profit for the three months ended in Feb. 2017 was \$2.13 Mil. Jewett-Cameron Trading Co Ltd's revenue for the three months ended in Feb. 2017 was \$9.50 Mil. Therefore, Jewett-Cameron Trading Co Ltd's Gross Margin for the quarter that ended in Feb. 2017 was 22.41%.

Jewett-Cameron Trading Co Ltd had a gross margin of 22.41% for the quarter that ended in Feb. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Jewett-Cameron Trading Co Ltd was 21.92%. The lowest was 16.66%. And the median was 19.86%.

Definition

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

Jewett-Cameron Trading Co Ltd's Gross Profit for the fiscal year that ended in Aug. 2016 is calculated as

 Gross Profit (A: Aug. 2016 ) = Revenue - Cost of Goods Sold = 48.111 - 38.374 = 9.74

Jewett-Cameron Trading Co Ltd's Gross Profit for the quarter that ended in Feb. 2017 is calculated as

 Gross Profit (Q: Feb. 2017 ) = Revenue - Cost of Goods Sold = 9.499 - 7.37 = 2.13

Jewett-Cameron Trading Co Ltd Gross Profit for the trailing twelve months (TTM) ended in Feb. 2017 was 3.177 (May. 2016 ) + 2.144 (Aug. 2016 ) + 2.394 (Nov. 2016 ) + 2.129 (Feb. 2017 ) = \$9.84 Mil.

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

Jewett-Cameron Trading Co Ltd's Gross Margin for the quarter that ended in Feb. 2017 is calculated as

 Gross Margin (Q: Feb. 2017 ) = Gross Profit (Q: Feb. 2017 ) / Revenue (Q: Feb. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 2.13 / 9.499 = 22.41 %

* 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

Jewett-Cameron Trading Co Ltd had a gross margin of 22.41% for the quarter that ended in Feb. 2017 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Jewett-Cameron Trading Co Ltd Annual Data

 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Gross_Profit 11.75 11.39 8.90 9.07 8.13 8.64 9.83 8.38 8.42 9.74

Jewett-Cameron Trading Co Ltd Quarterly Data

 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 Gross_Profit 1.87 1.90 2.24 2.40 2.38 2.04 3.18 2.14 2.39 2.13
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