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Atwood Oceanics Inc (NYSE:ATW)
Gross Margin
59.01% (As of Sep. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Atwood Oceanics Inc's gross profit for the three months ended in Sep. 2014 was $191 Mil. Atwood Oceanics Inc's revenue for the three months ended in Sep. 2014 was $323 Mil. Therefore, Atwood Oceanics Inc's Gross Margin for the quarter that ended in Sep. 2014 was 59.01%.

Warning Sign:

Atwood Oceanics Inc gross margin has been in long term decline. The average rate of decline per year is -3.5%.

ATW' s 10-Year Gross Margin Range
Min: 30.19   Max: 65.34
Current: 52.1

30.19
65.34

During the past 13 years, the highest Gross Margin of Atwood Oceanics Inc was 65.34%. The lowest was 30.19%. And the median was 52.34%.

ATW's Gross Marginis ranked lower than
100% of the Companies
in the Global Oil & Gas Drilling industry.

( Industry Median: vs. ATW: 52.10 )

Atwood Oceanics Inc had a gross margin of 59.01% for the quarter that ended in Sep. 2014 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for Atwood Oceanics Inc was -3.50% per year.


Definition

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

Atwood Oceanics Inc's Gross Margin for the fiscal year that ended in Sep. 2014 is calculated as

Gross Margin (A: Sep. 2014 )=Gross Profit (A: Sep. 2014 ) / Revenue (A: Sep. 2014 )
=611.6 / 1173.953
=(Revenue - Cost of Goods Sold) / Revenue
=(1173.953 - 562.353) / 1173.953
=52.10 %

Atwood Oceanics Inc's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=190.8 / 323.373
=(Revenue - Cost of Goods Sold) / Revenue
=(323.373 - 132.543) / 323.373
=59.01 %

* 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

Atwood Oceanics Inc had a gross margin of 59.01% for the quarter that ended in Sep. 2014 => 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 own currency.

Atwood Oceanics Inc Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Gross Margin 41.6147.8153.6158.9162.2061.2065.3455.9156.8552.10

Atwood Oceanics Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross Margin 51.0859.5654.3457.5556.7458.4753.7946.4848.0659.01
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