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GuruFocus has detected 6 Warning Signs with National Grid PLC \$NGG.
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National Grid PLC (NYSE:NGG)
Gross Profit
\$5,819 Mil (TTM As of Sep. 2016)

National Grid PLC's gross profit for the six months ended in Sep. 2016 was \$2,352 Mil. National Grid PLC's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was \$5,819 Mil.

Gross Margin is calculated as gross profit divided by its revenue. National Grid PLC's gross profit for the six months ended in Sep. 2016 was \$2,352 Mil. National Grid PLC's revenue for the six months ended in Sep. 2016 was \$9,465 Mil. Therefore, National Grid PLC's Gross Margin for the quarter that ended in Sep. 2016 was 24.85%.

National Grid PLC had a gross margin of 24.85% for the quarter that ended in Sep. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of National Grid PLC was 44.03%. The lowest was 24.87%. And the median was 26.59%.

Definition

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

National Grid PLC's Gross Profit for the fiscal year that ended in Mar. 2016 is calculated as

 Gross Profit (A: Mar. 2016 ) = Revenue - Cost of Goods Sold = 21531.3390313 - 15712.2507123 = 5,819

National Grid PLC's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

 Gross Profit (Q: Sep. 2016 ) = Revenue - Cost of Goods Sold = 9465.17739816 - 7113.00919842 = 2,352

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. National Grid PLC Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was \$5,819 Mil.

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

National Grid PLC's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

 Gross Margin (Q: Sep. 2016 ) = Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 2,352 / 9465.17739816 = 24.85 %

* 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

National Grid PLC had a gross margin of 24.85% for the quarter that ended in Sep. 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.

National Grid PLC Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Gross_Profit 4,889 10,124 7,275 8,869 6,050 5,600 5,662 6,204 5,650 5,819

National Grid PLC Semi-Annual Data

 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 Gross_Profit 3,239 2,810 3,035 2,437 3,654 2,664 3,205 2,836 3,185 2,352
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