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GuruFocus has detected 4 Warning Signs with Matthews International Corp \$MATW.
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Matthews International Corp (NAS:MATW)
Gross Profit
\$557 Mil (TTM As of Dec. 2016)

Matthews International Corp's gross profit for the three months ended in Dec. 2016 was \$127 Mil. Matthews International Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$557 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Matthews International Corp's gross profit for the three months ended in Dec. 2016 was \$127 Mil. Matthews International Corp's revenue for the three months ended in Dec. 2016 was \$349 Mil. Therefore, Matthews International Corp's Gross Margin for the quarter that ended in Dec. 2016 was 36.47%.

Matthews International Corp had a gross margin of 36.47% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Matthews International Corp was 39.45%. The lowest was 35.47%. And the median was 37.51%.

Definition

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

Matthews International Corp's Gross Profit for the fiscal year that ended in Sep. 2016 is calculated as

 Gross Profit (A: Sep. 2016 ) = Revenue - Cost of Goods Sold = 1480.464 - 924.01 = 556

Matthews International Corp's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 348.998 - 221.731 = 127

Matthews International Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 137.76 (Mar. 2016 ) + 145.297 (Jun. 2016 ) + 146.83 (Sep. 2016 ) + 127.267 (Dec. 2016 ) = \$557 Mil.

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

Matthews International Corp'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 = 127 / 348.998 = 36.47 %

* 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

Matthews International Corp had a gross margin of 36.47% for the quarter that ended in Dec. 2016 => 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.

Matthews International Corp Annual Data

 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Sep16 Gross_Profit 280 323 295 323 352 337 357 392 529 556

Matthews International Corp Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 117 125 128 135 142 127 138 145 147 127
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