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GuruFocus has detected 6 Warning Signs with STMicroelectronics NV $STM.
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STMicroelectronics NV (NYSE:STM)
Gross Profit
$2,210 Mil (TTM As of Sep. 2016)

STMicroelectronics NV's gross profit for the three months ended in Sep. 2016 was $643 Mil. STMicroelectronics NV's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was $2,210 Mil.

Gross Margin is calculated as gross profit divided by its revenue. STMicroelectronics NV's gross profit for the three months ended in Sep. 2016 was $643 Mil. STMicroelectronics NV's revenue for the three months ended in Sep. 2016 was $1,797 Mil. Therefore, STMicroelectronics NV's Gross Margin for the quarter that ended in Sep. 2016 was 35.78%.

STMicroelectronics NV had a gross margin of 35.78% for the quarter that ended in Sep. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of STMicroelectronics NV was 38.81%. The lowest was 30.86%. And the median was 34.51%.


Definition

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

STMicroelectronics NV's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=6897 - 4565
=2,332

STMicroelectronics NV's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

Gross Profit (Q: Sep. 2016 )=Revenue - Cost of Goods Sold
=1797 - 1154
=643

STMicroelectronics NV Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 558 (Dec. 2015 ) + 538 (Mar. 2016 ) + 471 (Jun. 2016 ) + 643 (Sep. 2016 ) = $2,210 Mil.

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

STMicroelectronics NV's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

Gross Margin (Q: Sep. 2016 )=Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=643 / 1797
=35.78 %

* 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

STMicroelectronics NV had a gross margin of 35.78% for the quarter that ended in Sep. 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.

STMicroelectronics NV Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 3,5363,5602,6264,0153,5742,7832,6142,4982,3322,455

STMicroelectronics NV Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 646619566595613558538471643698
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