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GuruFocus has detected 1 Warning Sign with Trinity Industries Inc $TRN.
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Trinity Industries Inc (NYSE:TRN)
Gross Profit
$1,132 Mil (TTM As of Dec. 2016)

Trinity Industries Inc's gross profit for the three months ended in Dec. 2016 was $263 Mil. Trinity Industries Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $1,132 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Trinity Industries Inc's gross profit for the three months ended in Dec. 2016 was $263 Mil. Trinity Industries Inc's revenue for the three months ended in Dec. 2016 was $1,104 Mil. Therefore, Trinity Industries Inc's Gross Margin for the quarter that ended in Dec. 2016 was 23.79%.

Trinity Industries Inc had a gross margin of 23.79% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Trinity Industries Inc was 27.16%. The lowest was 18.65%. And the median was 21.72%.


Definition

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

Trinity Industries 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
=4588.3 - 3456.1
=1,132

Trinity Industries 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
=1103.8 - 841.2
=263

Trinity Industries Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 298 (Mar. 2016 ) + 287.2 (Jun. 2016 ) + 284.4 (Sep. 2016 ) + 262.6 (Dec. 2016 ) = $1,132 Mil.

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

Trinity Industries 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
=263 / 1103.8
=23.79 %

* 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

Trinity Industries Inc had a gross margin of 23.79% 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.

Trinity Industries Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 7428034804405817601,0431,5501,7371,132

Trinity Industries Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 391386416457433431298287284263
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