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GuruFocus has detected 2 Warning Signs with Vulcan Materials Co \$VMC.
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Vulcan Materials Co (NYSE:VMC)
Gross Profit
\$1,001 Mil (TTM As of Dec. 2016)

Vulcan Materials Co's gross profit for the three months ended in Dec. 2016 was \$240 Mil. Vulcan Materials Co's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$1,001 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Vulcan Materials Co's gross profit for the three months ended in Dec. 2016 was \$240 Mil. Vulcan Materials Co's revenue for the three months ended in Dec. 2016 was \$873 Mil. Therefore, Vulcan Materials Co's Gross Margin for the quarter that ended in Dec. 2016 was 27.46%.

Vulcan Materials Co had a gross margin of 27.46% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Vulcan Materials Co was 28.57%. The lowest was 11.07%. And the median was 18.10%.

Definition

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

Vulcan Materials Co'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 = 3592.667 - 2591.85 = 1,001

Vulcan Materials Co's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 872.974 - 633.269 = 240

Vulcan Materials Co Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 164.718 (Mar. 2016 ) + 292.184 (Jun. 2016 ) + 304.209 (Sep. 2016 ) + 239.705 (Dec. 2016 ) = \$1,001 Mil.

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

Vulcan Materials Co'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 = 240 / 872.974 = 27.46 %

* 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

Vulcan Materials Co had a gross margin of 27.46% for the quarter that ended in Dec. 2016 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Vulcan Materials Co Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 951 750 446 301 284 334 427 588 858 1,001

Vulcan Materials Co Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 209 170 78 234 291 254 165 292 304 240
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