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Adtran Inc (NAS:ADTN)
Gross Margin
44.89% (As of Sep. 2016)

Gross Margin is calculated as gross profit divided by its revenue. Adtran Inc's gross profit for the three months ended in Sep. 2016 was $75.8 Mil. Adtran Inc's revenue for the three months ended in Sep. 2016 was $168.9 Mil. Therefore, Adtran Inc's Gross Margin for the quarter that ended in Sep. 2016 was 44.89%.

Warning Sign:

Adtran Inc gross margin has been in long term decline. The average rate of decline per year is -5.5%.

ADTN' s Gross Margin Range Over the Past 10 Years
Min: 44.48   Max: 59.7
Current: 46.18

44.48
59.7

During the past 13 years, the highest Gross Margin of Adtran Inc was 59.70%. The lowest was 44.48%. And the median was 58.39%.

ADTN's Gross Margin is ranked higher than
73% of the 535 Companies
in the Global Communication Equipment industry.

( Industry Median: 29.16 vs. ADTN: 46.18 )

Adtran Inc had a gross margin of 44.89% for the quarter that ended in Sep. 2016 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Adtran Inc was -5.50% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Adtran Inc's Gross Margin for the fiscal year that ended in Dec. 2015 is calculated as

Gross Margin (A: Dec. 2015 )=Gross Profit (A: Dec. 2015 ) / Revenue (A: Dec. 2015 )
=266.9 / 600.064
=(Revenue - Cost of Goods Sold) / Revenue
=(600.064 - 333.167) / 600.064
=44.48 %

Adtran Inc's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

Gross Margin (Q: Sep. 2016 )=Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 )
=75.8 / 168.89
=(Revenue - Cost of Goods Sold) / Revenue
=(168.89 - 93.082) / 168.89
=44.89 %

* 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

Adtran Inc had a gross margin of 44.89% for the quarter that ended in Sep. 2016 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

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

Adtran Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross Margin 59.0159.3559.7059.2759.2557.7751.0248.1349.4244.48

Adtran Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Gross Margin 49.2848.0447.5645.9042.6244.6944.9246.2748.5344.89
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