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Lowe's Companies Inc (NYSE:LOW)
Gross Profit
$19,253 Mil (TTM As of Oct. 2014)

Lowe's Companies Inc's gross profit for the three months ended in Oct. 2014 was $4,718 Mil. Lowe's Companies Inc's gross profit for the trailing twelve months (TTM) ended in Oct. 2014 was $19,253 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Lowe's Companies Inc's gross profit for the three months ended in Oct. 2014 was $4,718 Mil. Lowe's Companies Inc's revenue for the three months ended in Oct. 2014 was $13,681 Mil. Therefore, Lowe's Companies Inc's Gross Margin for the quarter that ended in Oct. 2014 was 34.49%.

Lowe's Companies Inc had a gross margin of 34.49% for the quarter that ended in Oct. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Lowe's Companies Inc was 35.14%. The lowest was 24.80%. And the median was 32.36%.


Definition

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

Lowe's Companies Inc's Gross Profit for the fiscal year that ended in Jan. 2014 is calculated as

Gross Profit (A: Jan. 2014 )=Revenue - Cost of Goods Sold
=53417 - 34941
=18,476

Lowe's Companies Inc's Gross Profit for the quarter that ended in Oct. 2014 is calculated as

Gross Profit (Q: Oct. 2014 )=Revenue - Cost of Goods Sold
=13681 - 8963
=4,718

Lowe's Companies Inc Gross Profit for the trailing twelve months (TTM) ended in Oct. 2014 was 4042 (Jan. 2014 ) + 4758 (Apr. 2014 ) + 5735 (Jul. 2014 ) + 4718 (Oct. 2014 ) = $19,253 Mil.

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

Lowe's Companies Inc's Gross Margin for the quarter that ended in Oct. 2014 is calculated as

Gross Margin (Q: Oct. 2014 )=Gross Profit (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=4,718 / 13681
=34.49 %

* 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

Lowe's Companies Inc had a gross margin of 34.49% for the quarter that ended in Oct. 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.

Lowe's Companies Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross_Profit 12,24014,79016,19816,72716,50116,46317,15217,35017,32718,476

Lowe's Companies Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Gross_Profit 4,8344,1433,7854,5555,3974,4814,0424,7585,7354,718
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