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Meritage Homes Corp (NYSE:MTH)
Gross Profit
$454 Mil (TTM As of Jun. 2014)

Meritage Homes Corp's gross profit for the three months ended in Jun. 2014 was $114 Mil. Meritage Homes Corp's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $454 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Meritage Homes Corp's gross profit for the three months ended in Jun. 2014 was $114 Mil. Meritage Homes Corp's revenue for the three months ended in Jun. 2014 was $510 Mil. Therefore, Meritage Homes Corp's Gross Margin for the quarter that ended in Jun. 2014 was 22.26%.

Meritage Homes Corp had a gross margin of 22.26% for the quarter that ended in Jun. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Meritage Homes Corp was 100.00%. The lowest was -2.42%. And the median was 19.96%.


Definition

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

Meritage Homes Corp's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=1833.879 - 1421.507
=412

Meritage Homes Corp's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=510.352 - 396.732
=114

Meritage Homes Corp Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 117.476 (Sep. 2013 ) + 128.088 (Dec. 2013 ) + 94.597 (Mar. 2014 ) + 113.62 (Jun. 2014 ) = $454 Mil.

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

Meritage Homes Corp's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=114 / 510.352
=22.26 %

* 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

Meritage Homes Corp had a gross margin of 22.26% for the quarter that ended in Jun. 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.

Meritage Homes Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 40870771313-374168141228412

Meritage Homes Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 546572689911712895114115
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