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GuruFocus has detected 4 Warning Signs with Wal-Mart Stores Inc $WMT.
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Wal-Mart Stores Inc (NYSE:WMT)
Gross Profit
$124,617 Mil (TTM As of Jan. 2017)

Wal-Mart Stores Inc's gross profit for the three months ended in Jan. 2017 was $33,193 Mil. Wal-Mart Stores Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was $124,617 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Wal-Mart Stores Inc's gross profit for the three months ended in Jan. 2017 was $33,193 Mil. Wal-Mart Stores Inc's revenue for the three months ended in Jan. 2017 was $130,936 Mil. Therefore, Wal-Mart Stores Inc's Gross Margin for the quarter that ended in Jan. 2017 was 25.35%.

Wal-Mart Stores Inc had a gross margin of 25.35% for the quarter that ended in Jan. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Wal-Mart Stores Inc was 25.65%. The lowest was 24.34%. And the median was 24.91%.


Definition

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

Wal-Mart Stores Inc's Gross Profit for the fiscal year that ended in Jan. 2017 is calculated as

Gross Profit (A: Jan. 2017 )=Revenue - Cost of Goods Sold
=485873 - 361256
=124,617

Wal-Mart Stores Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

Gross Profit (Q: Jan. 2017 )=Revenue - Cost of Goods Sold
=130936 - 97743
=33,193

Wal-Mart Stores Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 29360 (Apr. 2016 ) + 31369 (Jul. 2016 ) + 30695 (Oct. 2016 ) + 33193 (Jan. 2017 ) = $124,617 Mil.

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

Wal-Mart Stores Inc'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
=33,193 / 130936
=25.35 %

* 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

Wal-Mart Stores Inc had a gross margin of 25.35% 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.

Wal-Mart Stores Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
Gross_Profit 92,126100,318103,641106,903111,516116,354118,225120,565121,146124,617

Wal-Mart Stores Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Gross_Profit 29,75432,45028,34330,17329,96232,66829,36031,36930,69533,193
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