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CarMax Inc (NYSE:KMX)
Gross Profit
$1,796 Mil (TTM As of Nov. 2014)

CarMax Inc's gross profit for the three months ended in Nov. 2014 was $447 Mil. CarMax Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2014 was $1,796 Mil.

Gross Margin is calculated as gross profit divided by its revenue. CarMax Inc's gross profit for the three months ended in Nov. 2014 was $447 Mil. CarMax Inc's revenue for the three months ended in Nov. 2014 was $3,405 Mil. Therefore, CarMax Inc's Gross Margin for the quarter that ended in Nov. 2014 was 13.12%.

CarMax Inc had a gross margin of 13.12% for the quarter that ended in Nov. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of CarMax Inc was 14.71%. The lowest was 8.84%. And the median was 12.66%.

Warning Sign:

CarMax Inc gross margin has been in long term decline. The average rate of decline per year is -1.8%.


Definition

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

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

Gross Profit (A: Feb. 2014 )=Revenue - Cost of Goods Sold
=12574.299 - 10925.598
=1,649

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

Gross Profit (Q: Nov. 2014 )=Revenue - Cost of Goods Sold
=3405.234 - 2958.614
=447

CarMax Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2014 was 384.141 (Feb. 2014 ) + 501.731 (May. 2014 ) + 463.339 (Aug. 2014 ) + 446.62 (Nov. 2014 ) = $1,796 Mil.

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

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

Gross Margin (Q: Nov. 2014 )=Gross Profit (Q: Nov. 2014 ) / Revenue (Q: Nov. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=447 / 3405.234
=13.12 %

* 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

CarMax Inc had a gross margin of 13.12% for the quarter that ended in Nov. 2014 => 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 own currency.

CarMax Inc Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Gross_Profit 6507919711,0729681,0991,3011,3791,4641,649

CarMax Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Gross_Profit 368345369448435382384502463447
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