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NorthWestern Corp (NYSE:NWE)
Gross Profit
$701 Mil (TTM As of Jun. 2014)

NorthWestern Corp's gross profit for the three months ended in Jun. 2014 was $158 Mil. NorthWestern Corp's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $701 Mil.

Gross Margin is calculated as gross profit divided by its revenue. NorthWestern Corp's gross profit for the three months ended in Jun. 2014 was $158 Mil. NorthWestern Corp's revenue for the three months ended in Jun. 2014 was $270 Mil. Therefore, NorthWestern Corp's Gross Margin for the quarter that ended in Jun. 2014 was 58.39%.

NorthWestern Corp had a gross margin of 58.39% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of NorthWestern Corp was 100.00%. The lowest was 17.86%. And the median was 55.74%.


Definition

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

NorthWestern 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
=1154.519 - 479.546
=675

NorthWestern 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
=270.281 - 112.474
=158

NorthWestern Corp Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 157.95 (Sep. 2013 ) + 182.951 (Dec. 2013 ) + 202.295 (Mar. 2014 ) + 157.807 (Jun. 2014 ) = $701 Mil.

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

NorthWestern 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
=158 / 270.281
=58.39 %

* 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

NorthWestern Corp had a gross margin of 58.39% for the quarter that ended in Jun. 2014 => Durable 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.

NorthWestern Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 2061,16600562568580623675675

NorthWestern Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 171148143213181153158183202158
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