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GuruFocus has detected 7 Warning Signs with Toro Co $TTC.
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Toro Co (NYSE:TTC)
Gross Profit
$885 Mil (TTM As of Jan. 2017)

Toro Co's gross profit for the three months ended in Jan. 2017 was $193 Mil. Toro Co's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was $885 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Toro Co's gross profit for the three months ended in Jan. 2017 was $193 Mil. Toro Co's revenue for the three months ended in Jan. 2017 was $516 Mil. Therefore, Toro Co's Gross Margin for the quarter that ended in Jan. 2017 was 37.51%.

Toro Co had a gross margin of 37.51% for the quarter that ended in Jan. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Toro Co was 36.56%. The lowest was 33.54%. And the median was 34.86%.


Definition

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

Toro Co's Gross Profit for the fiscal year that ended in Oct. 2016 is calculated as

Gross Profit (A: Oct. 2016 )=Revenue - Cost of Goods Sold
=2392.175 - 1517.58
=875

Toro Co's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

Gross Profit (Q: Jan. 2017 )=Revenue - Cost of Goods Sold
=515.839 - 322.359
=193

Toro Co Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 303.187 (Apr. 2016 ) + 216.617 (Jul. 2016 ) + 172.137 (Oct. 2016 ) + 193.48 (Jan. 2017 ) = $885 Mil.

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

Toro Co's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

Gross Margin (Q: Jan. 2017 )=Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=193 / 515.839
=37.51 %

* 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

Toro Co had a gross margin of 37.51% for the quarter that ended in Jan. 2017 => 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.

Toro Co Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Gross_Profit 678653511576637673725773836875

Toro Co Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Gross_Profit 143169282216169183303217172193
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