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GuruFocus has detected 3 Warning Signs with Steelcase Inc $SCS.
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Steelcase Inc (NYSE:SCS)
Gross Profit
$989 Mil (TTM As of Nov. 2016)

Steelcase Inc's gross profit for the three months ended in Nov. 2016 was $262 Mil. Steelcase Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2016 was $989 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Steelcase Inc's gross profit for the three months ended in Nov. 2016 was $262 Mil. Steelcase Inc's revenue for the three months ended in Nov. 2016 was $787 Mil. Therefore, Steelcase Inc's Gross Margin for the quarter that ended in Nov. 2016 was 33.30%.

Steelcase Inc had a gross margin of 33.30% for the quarter that ended in Nov. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Steelcase Inc was 32.85%. The lowest was 28.35%. And the median was 30.07%.


Definition

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

Steelcase Inc's Gross Profit for the fiscal year that ended in Feb. 2016 is calculated as

Gross Profit (A: Feb. 2016 )=Revenue - Cost of Goods Sold
=3060 - 2088.8
=971

Steelcase Inc's Gross Profit for the quarter that ended in Nov. 2016 is calculated as

Gross Profit (Q: Nov. 2016 )=Revenue - Cost of Goods Sold
=786.5 - 524.6
=262

Steelcase Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2016 was 234.3 (Feb. 2016 ) + 229.8 (May. 2016 ) + 263.1 (Aug. 2016 ) + 261.9 (Nov. 2016 ) = $989 Mil.

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

Steelcase Inc's Gross Margin for the quarter that ended in Nov. 2016 is calculated as

Gross Margin (Q: Nov. 2016 )=Gross Profit (Q: Nov. 2016 ) / Revenue (Q: Nov. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=262 / 786.5
=33.30 %

* 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

Steelcase Inc had a gross margin of 33.30% for the quarter that ended in Nov. 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.

Steelcase Inc Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
Gross_Profit 9481,099923650718810866945916971

Steelcase Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
Gross_Profit 244215228217267254234230263262
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