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GuruFocus has detected 5 Warning Signs with Sunoco Logistics Partners LP $SXL.
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Sunoco Logistics Partners LP (NYSE:SXL)
Gross Profit
$1,201 Mil (TTM As of Dec. 2016)

Sunoco Logistics Partners LP's gross profit for the three months ended in Dec. 2016 was $226 Mil. Sunoco Logistics Partners LP's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $1,201 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Sunoco Logistics Partners LP's gross profit for the three months ended in Dec. 2016 was $226 Mil. Sunoco Logistics Partners LP's revenue for the three months ended in Dec. 2016 was $2,917 Mil. Therefore, Sunoco Logistics Partners LP's Gross Margin for the quarter that ended in Dec. 2016 was 7.75%.

Sunoco Logistics Partners LP had a gross margin of 7.75% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Sunoco Logistics Partners LP was 13.12%. The lowest was 3.37%. And the median was 6.57%.


Definition

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

Sunoco Logistics Partners LP'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
=9151 - 7950
=1,201

Sunoco Logistics Partners LP's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=2917 - 2691
=226

Sunoco Logistics Partners LP Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 364 (Mar. 2016 ) + 277 (Jun. 2016 ) + 334 (Sep. 2016 ) + 226 (Dec. 2016 ) = $1,201 Mil.

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

Sunoco Logistics Partners LP'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
=226 / 2917
=7.75 %

* 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

Sunoco Logistics Partners LP had a gross margin of 7.75% for the quarter that ended in Dec. 2016 => No sustainable 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 local exchange's currency.

Sunoco Logistics Partners LP Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 2503514074407521,0221,0391,0391,1771,201

Sunoco Logistics Partners LP Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 279258254365366192364277334226
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