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Walgreen Co (NYSE:WAG)
Gross Profit
$21,215 Mil (TTM As of Feb. 2014)

Walgreen Co's gross profit for the three months ended in Feb. 2014 was $5,650 Mil. Walgreen Co's gross profit for the trailing twelve months (TTM) ended in Feb. 2014 was $21,215 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Walgreen Co's gross profit for the three months ended in Feb. 2014 was $5,650 Mil. Walgreen Co's revenue for the three months ended in Feb. 2014 was $19,605 Mil. Therefore, Walgreen Co's Gross Margin for the quarter that ended in Feb. 2014 was 28.82%.

Walgreen Co had a gross margin of 28.82% for the quarter that ended in Feb. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Walgreen Co was 29.29%. The lowest was 26.52%. And the median was 28.19%.


Definition

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

Walgreen Co's Gross Profit for the fiscal year that ended in Aug. 2013 is calculated as

Gross Profit (A: Aug. 2013 )=Revenue - Cost of Goods Sold
=72217 - 51098
=21,119

Walgreen Co's Gross Profit for the quarter that ended in Feb. 2014 is calculated as

Gross Profit (Q: Feb. 2014 )=Revenue - Cost of Goods Sold
=19605 - 13955
=5,650

Walgreen Co Gross Profit for the trailing twelve months (TTM) ended in Feb. 2014 was 5222 (May. 2013 ) + 5191 (Aug. 2013 ) + 5152 (Nov. 2013 ) + 5650 (Feb. 2014 ) = $21,215 Mil.

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

Walgreen Co's Gross Margin for the quarter that ended in Feb. 2014 is calculated as

Gross Margin (Q: Feb. 2014 )=Gross Profit (Q: Feb. 2014 ) / Revenue (Q: Feb. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=5,650 / 19605
=28.82 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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

Walgreen Co had a gross margin of 28.82% for the quarter that ended in Feb. 2014 => 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 own currency.

Walgreen Co Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
Gross_Profit 10,19811,78813,16915,24416,64317,61318,97620,49220,34221,119

Walgreen Co Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
Gross_Profit 5,1045,3895,0144,8355,0995,6075,2225,1915,1525,650
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