Switch to:
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
PMC-Sierra Inc (NAS:PMCS)
Gross Profit
\$371.1 Mil (TTM As of Sep. 2015)

PMC-Sierra Inc's gross profit for the three months ended in Sep. 2015 was \$95.6 Mil. PMC-Sierra Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2015 was \$371.1 Mil.

Gross Margin is calculated as gross profit divided by its revenue. PMC-Sierra Inc's gross profit for the three months ended in Sep. 2015 was \$95.6 Mil. PMC-Sierra Inc's revenue for the three months ended in Sep. 2015 was \$133.6 Mil. Therefore, PMC-Sierra Inc's Gross Margin for the quarter that ended in Sep. 2015 was 71.55%.

PMC-Sierra Inc had a gross margin of 71.55% for the quarter that ended in Sep. 2015 => Durable competitive advantage

Definition

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

PMC-Sierra 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 = 525.603 - 155.396 = 370.2

PMC-Sierra Inc's Gross Profit for the quarter that ended in Sep. 2015 is calculated as

 Gross Profit (Q: Sep. 2015 ) = Revenue - Cost of Goods Sold = 133.574 - 37.999 = 95.6

PMC-Sierra Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2015 was 96.149 (Dec. 2014 ) + 93.091 (Mar. 2015 ) + 86.333 (Jun. 2015 ) + 95.575 (Sep. 2015 ) = \$371.1 Mil.

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

PMC-Sierra Inc's Gross Margin for the quarter that ended in Sep. 2015 is calculated as

 Gross Margin (Q: Sep. 2015 ) = Gross Profit (Q: Sep. 2015 ) / Revenue (Q: Sep. 2015 ) = (Revenue - Cost of Goods Sold) / Revenue = 95.6 / 133.574 = 71.55 %

* 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

PMC-Sierra Inc had a gross margin of 71.55% for the quarter that ended in Sep. 2015 => Durable 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.

PMC-Sierra Inc Annual Data

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Gross_Profit 210.4 278.5 291.1 343.4 330.9 430.6 442.7 372.1 358.8 370.2

PMC-Sierra Inc Quarterly Data

 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Gross_Profit 89.9 91.6 89.5 88.9 90.0 95.2 96.1 93.1 86.3 95.6
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)