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NRG Energy Inc (NYSE:NRG)
Gross Profit
$4,089 Mil (TTM As of Dec. 2014)

NRG Energy Inc's gross profit for the three months ended in Dec. 2014 was $1,241 Mil. NRG Energy Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was $4,089 Mil.

Gross Margin is calculated as gross profit divided by its revenue. NRG Energy Inc's gross profit for the three months ended in Dec. 2014 was $1,241 Mil. NRG Energy Inc's revenue for the three months ended in Dec. 2014 was $4,192 Mil. Therefore, NRG Energy Inc's Gross Margin for the quarter that ended in Dec. 2014 was 29.60%.

NRG Energy Inc had a gross margin of 29.60% for the quarter that ended in Dec. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of NRG Energy Inc was 100.00%. The lowest was 25.77%. And the median was 46.02%.

Warning Sign:

NRG Energy Inc gross margin has been in long term decline. The average rate of decline per year is -7.1%.


Definition

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

NRG Energy 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
=15868 - 11779
=4,089

NRG Energy Inc's Gross Profit for the quarter that ended in Dec. 2014 is calculated as

Gross Profit (Q: Dec. 2014 )=Revenue - Cost of Goods Sold
=4192 - 2951
=1,241

NRG Energy Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 753 (Mar. 2014 ) + 804 (Jun. 2014 ) + 1291 (Sep. 2014 ) + 1241 (Dec. 2014 ) = $4,089 Mil.

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

NRG Energy Inc's Gross Margin for the quarter that ended in Dec. 2014 is calculated as

Gross Margin (Q: Dec. 2014 )=Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,241 / 4192
=29.60 %

* 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

NRG Energy Inc had a gross margin of 29.60% for the quarter that ended in Dec. 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.

NRG Energy Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 2,4005,5855,9893,2873,6292,7762,4042,2823,1744,089

NRG Energy Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Gross_Profit 5915833288781,1178517538041,2911,241
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