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GuruFocus has detected 2 Warning Signs with Mueller Industries Inc \$MLI.
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Mueller Industries Inc (NYSE:MLI)
Gross Profit
\$332 Mil (TTM As of Dec. 2016)

Mueller Industries Inc's gross profit for the three months ended in Dec. 2016 was \$76 Mil. Mueller Industries Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$332 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Mueller Industries Inc's gross profit for the three months ended in Dec. 2016 was \$76 Mil. Mueller Industries Inc's revenue for the three months ended in Dec. 2016 was \$472 Mil. Therefore, Mueller Industries Inc's Gross Margin for the quarter that ended in Dec. 2016 was 16.10%.

Mueller Industries Inc had a gross margin of 16.10% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Mueller Industries Inc was 16.16%. The lowest was 12.50%. And the median was 13.78%.

Definition

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

Mueller Industries Inc'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 = 2055.622 - 1723.499 = 332

Mueller Industries Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 472.158 - 396.129 = 76

Mueller Industries Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 86.167 (Mar. 2016 ) + 88.011 (Jun. 2016 ) + 81.916 (Sep. 2016 ) + 76.029 (Dec. 2016 ) = \$332 Mil.

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

Mueller Industries Inc'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 = 76 / 472.158 = 16.10 %

* 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

Mueller Industries Inc had a gross margin of 16.10% for the quarter that ended in Dec. 2016 => No sustainable 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.

Mueller Industries Inc Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 373 325 220 285 302 285 296 321 290 332

Mueller Industries Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 82 68 76 85 68 61 86 88 82 76
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