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Symantec Corp (NAS:SYMC)
Operating Income
$1,149 Mil (TTM As of Mar. 2015)

Symantec Corp's operating income for the three months ended in Mar. 2015 was $152 Mil. Its operating income for the trailing twelve months (TTM) ended in Mar. 2015 was $1,149 Mil.

Operating margin is calculated as operating income divided by its revenue. Symantec Corp's operating income for the three months ended in Mar. 2015 was $152 Mil. Symantec Corp's revenue for the three months ended in Mar. 2015 was $1,518 Mil. Therefore, Symantec Corp's operating margin for the quarter that ended in Mar. 2015 was 10.01%.

Good Sign:

Symantec Corp operating margin is expanding. Margin expansion is usually a good sign.

Symantec Corp's 3-Year average Growth Rate for operating margin was 3.70% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt’s definition. Symantec Corp's annualized return on capital for the quarter that ended in Mar. 2015 was 9.97%. Symantec Corp's annualized return on capital (Joel Greenblatt’s) for the quarter that ended in Mar. 2015 was 50.86%.

Operating income is also linked to Joel Greenblatt’s definition of earnings yield. Symantec Corp's earnings yield (Joel Greenblatt’s) for the quarter that ended in Mar. 2015 was 7.98%.


Definition

Operating income, sometimes also called Earnings Before Interest and Taxes (EBIT), is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Symantec Corp's Operating Income for the fiscal year that ended in Mar. 2015 is calculated as

Operating Income (EBIT)(A: Mar. 2015 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=6508-1153-2702
-Research & Development-Depreciation, Depletion & Amortization-Others
-1144-439--79
=1,149

Symantec Corp's Operating Income for the quarter that ended in Mar. 2015 is calculated as

Operating Income (EBIT)(Q: Mar. 2015 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=1518-287-640
-Research & Development-Depreciation, Depletion & Amortization-Others (1)
-293-105-41
=152

Operating Income (EBIT)(Q: Mar. 2015 )
=EBITDA-Depreciation, Depletion & Amortization-Others (2)
=267-105-10
=152

Symantec Corp Operating Income for the trailing twelve months (TTM) ended in Mar. 2015 was 322 (Jun. 2014 ) + 348 (Sep. 2014 ) + 327 (Dec. 2014 ) + 152 (Mar. 2015 ) = $1,149 Mil.

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


Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt’s definition.

Symantec Corp's annualized Return on Capital (ROC) for the quarter that ended in Mar. 2015 is calculated as:

Return on Capital (ROC)(Q: Mar. 2015 )
=(EBIT - Adjusted Taxes)/Average Total Capital
=Net Income/( (Total Capital (Q: Dec. 2014 ) + Total Capital (Q: Mar. 2015 ))/ 2 )
=704/( (6962 + 7165)/ 2 )
=704/7063.5
=9.97 %

where

Total Capital(Q: Dec. 2014 )
=Book Value of Debt + Book Value of Equity - Cash
=Total Current Assets + Property, Plant and Equipment + Other Current Assets
=5255 + 1186 + 521
=6962

Total Capital(Q: Mar. 2015 )
=Book Value of Debt + Book Value of Equity - Cash
=Total Current Assets + Property, Plant and Equipment + Other Current Assets
=5422 + 1205 + 538
=7165

Note: The Net Income data used here is four times the quarterly (Mar. 2015) net income data.

2. Joel Greenblatt’s definition of Return on Capital:

Symantec Corp's annualized Return on Capital (Joel Greenblatt’s) for the quarter that ended in Mar. 2015 is calculated as:

ROC (Joel Greenblatt’s)(Q: Mar. 2015 )
=EBIT/Average of (Net fixed Assets + Net Working Capital)
=Operating Income/Average of (Net PPE+Net Working Capital)
     Q: Dec. 2014  Q: Mar. 2015
=Operating Income/( ( (Net PPE + Net Working Capital) + (Net PPE + Net Working Capital) )/2 )
=608/( ( (1186 + max(-2368, 0)) + (1205 + max(-2572, 0)) )/2 )
=608/( ( 1186 + 1205 )/2 )
=608/1195.5
=50.86 %

where Working Capital is:

Working Capital(Q: Dec. 2014 )
=(Accts Rec. + Inventory + Other Curr. Ass.) - (Accts Pay. + Defer. Rev. + Other Curr. Liab.)
=(982 + 12 + 521) - (594 + 2961 + 328)
=-2368

Working Capital(Q: Mar. 2015 )
=(Accts Rec. + Inventory + Other Curr. Ass.) - (Accts Pay. + Defer. Rev. + Other Curr. Liab.)
=(993 + 0 + 538) - (611 + 3109 + 383)
=-2572

When net working capital is negative, 0 is used.

Note: The Operating Income data used here is four times the quarterly (Mar. 2015) operating income data.

3. It is also linked to Joel Greenblatt’s definition of Earnings Yield:

Symantec Corp's Earnings Yield (Joel Greenblatt’s) for the quarter that ended in Mar. 2015 is calculated as:

Earnings Yield (Joel Greenblatt’s)=Operating Income (TTM)/Enterprise Value (Q: Mar. 2015 )
=1149/14396.945
=7.98 %

4. EBIT is also linked to Operating Margin:

Symantec Corp's Operating Margin for the quarter that ended in Mar. 2015 is calculated as:

Operating Margin=Operating Income (Q: Mar. 2015 )/Total Revenue (Q: Mar. 2015 )
=152/1518
=10.01 %

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


Be Aware

Compared with a company’s EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company’s revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)’s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia’s Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus’s Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.


Related Terms

Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense, Research & Development, Gross Profit, EBITDA, Depreciation, Depletion and Amortization, Return on Capital, Return on Capital (Joel Greenblatt’s), Earnings Yield, Operating Margin


Historical Data

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

Symantec Corp Annual Data

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
Operating Income 274520602-6,4709338801,0791,1061,1831,149

Symantec Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Operating Income 304255224248405306322348327152
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