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GuruFocus has detected 4 Warning Signs with Sturm Ruger & Co Inc $RGR.
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Sturm Ruger & Co Inc (NYSE:RGR)
Gross Profit
$219.6 Mil (TTM As of Dec. 2016)

Sturm Ruger & Co Inc's gross profit for the three months ended in Dec. 2016 was $53.5 Mil. Sturm Ruger & Co Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $219.6 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Sturm Ruger & Co Inc's gross profit for the three months ended in Dec. 2016 was $53.5 Mil. Sturm Ruger & Co Inc's revenue for the three months ended in Dec. 2016 was $161.8 Mil. Therefore, Sturm Ruger & Co Inc's Gross Margin for the quarter that ended in Dec. 2016 was 33.05%.

Sturm Ruger & Co Inc had a gross margin of 33.05% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Sturm Ruger & Co Inc was 37.57%. The lowest was 23.56%. And the median was 32.62%.

Warning Sign:

Sturm Ruger & Co Inc gross margin has been in long term decline. The average rate of decline per year is -2.2%.


Definition

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

Sturm Ruger & Co Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=664.328 - 444.774
=219.6

Sturm Ruger & Co Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=161.848 - 108.352
=53.5

Sturm Ruger & Co Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 59.113 (Mar. 2016 ) + 56.694 (Jun. 2016 ) + 50.251 (Sep. 2016 ) + 53.496 (Dec. 2016 ) = $219.6 Mil.

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

Sturm Ruger & Co Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=53.5 / 161.848
=33.05 %

* 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

Sturm Ruger & Co Inc had a gross margin of 33.05% for the quarter that ended in Dec. 2016 => 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 local exchange's currency.

Sturm Ruger & Co Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 39.342.887.684.0111.8179.0258.6169.2172.2219.6

Sturm Ruger & Co Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 23.734.041.448.534.048.259.156.750.353.5
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