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M D C Holdings Inc (NYSE:MDC)
Gross Profit
$290 Mil (TTM As of Jun. 2015)

M D C Holdings Inc's gross profit for the three months ended in Jun. 2015 was $84 Mil. M D C Holdings Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2015 was $290 Mil.

Gross Margin is calculated as gross profit divided by its revenue. M D C Holdings Inc's gross profit for the three months ended in Jun. 2015 was $84 Mil. M D C Holdings Inc's revenue for the three months ended in Jun. 2015 was $473 Mil. Therefore, M D C Holdings Inc's Gross Margin for the quarter that ended in Jun. 2015 was 17.73%.

M D C Holdings Inc had a gross margin of 17.73% for the quarter that ended in Jun. 2015 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of M D C Holdings Inc was 29.73%. The lowest was 6.53%. And the median was 15.08%.

Warning Sign:

M D C Holdings Inc gross margin has been in long term decline. The average rate of decline per year is -4%.


Definition

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

M D C Holdings Inc's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=1650.631 - 1369.94
=281

M D C Holdings Inc's Gross Profit for the quarter that ended in Jun. 2015 is calculated as

Gross Profit (Q: Jun. 2015 )=Revenue - Cost of Goods Sold
=473.128 - 389.226
=84

M D C Holdings Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2015 was 67.682 (Sep. 2014 ) + 80.239 (Dec. 2014 ) + 57.802 (Mar. 2015 ) + 83.902 (Jun. 2015 ) = $290 Mil.

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

M D C Holdings Inc's Gross Margin for the quarter that ended in Jun. 2015 is calculated as

Gross Margin (Q: Jun. 2015 )=Gross Profit (Q: Jun. 2015 ) / Revenue (Q: Jun. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=84 / 473.128
=17.73 %

* 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

M D C Holdings Inc had a gross margin of 17.73% for the quarter that ended in Jun. 2015 => 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.

M D C Holdings Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 1,4551,149446219186208107177289281

M D C Holdings Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Gross_Profit 58737880598068805884
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