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GuruFocus has detected 6 Warning Signs with Lamar Advertising Co \$LAMR.
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Gross Profit
\$975 Mil (TTM As of Dec. 2016)

Lamar Advertising Co's gross profit for the three months ended in Dec. 2016 was \$254 Mil. Lamar Advertising Co's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$975 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Lamar Advertising Co's gross profit for the three months ended in Dec. 2016 was \$254 Mil. Lamar Advertising Co's revenue for the three months ended in Dec. 2016 was \$387 Mil. Therefore, Lamar Advertising Co's Gross Margin for the quarter that ended in Dec. 2016 was 65.77%.

Lamar Advertising Co had a gross margin of 65.77% for the quarter that ended in Dec. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Lamar Advertising Co was 66.24%. The lowest was 62.34%. And the median was 64.65%.

Definition

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

Lamar Advertising Co's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

 Gross Profit (A: Dec. 2016 ) = Revenue - Cost of Goods Sold = 1500.294 - 525.597 = 975

Lamar Advertising Co's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 386.717 - 132.369 = 254

Lamar Advertising Co Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 209.808 (Mar. 2016 ) + 254.803 (Jun. 2016 ) + 255.738 (Sep. 2016 ) + 254.348 (Dec. 2016 ) = \$975 Mil.

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

Lamar Advertising Co's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

 Gross Margin (Q: Dec. 2016 ) = Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 254 / 386.717 = 65.77 %

* 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

Lamar Advertising Co had a gross margin of 65.77% for the quarter that ended in Dec. 2016 => Durable competitive advantage

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.