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Dean Foods Co (NYSE:DF)
Gross Margin
25.14% (As of Dec. 2015)

Gross Margin is calculated as gross profit divided by its revenue. Dean Foods Co's gross profit for the three months ended in Dec. 2015 was $508 Mil. Dean Foods Co's revenue for the three months ended in Dec. 2015 was $2,023 Mil. Therefore, Dean Foods Co's Gross Margin for the quarter that ended in Dec. 2015 was 25.14%.

Warning Sign:

Dean Foods Co gross margin has been in long term decline. The average rate of decline per year is -2.6%.

DF' s Gross Margin Range Over the Past 10 Years
Min: 17.61   Max: 27.94
Current: 24.31

17.61
27.94

During the past 13 years, the highest Gross Margin of Dean Foods Co was 27.94%. The lowest was 17.61%. And the median was 23.41%.

DF's Gross Margin is ranked lower than
57% of the 1576 Companies
in the Global Packaged Foods industry.

( Industry Median: 27.91 vs. DF: 24.31 )

Dean Foods Co had a gross margin of 25.14% for the quarter that ended in Dec. 2015 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Dean Foods Co was -2.60% per year.


Definition

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

Dean Foods Co'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 )
=1974.4 / 8121.661
=(Revenue - Cost of Goods Sold) / Revenue
=(8121.661 - 6147.252) / 8121.661
=24.31 %

Dean Foods Co's Gross Margin for the quarter that ended in Dec. 2015 is calculated as

Gross Margin (Q: Dec. 2015 )=Gross Profit (Q: Dec. 2015 ) / Revenue (Q: Dec. 2015 )
=508.5 / 2022.5
=(Revenue - Cost of Goods Sold) / Revenue
=(2022.5 - 1514.029) / 2022.5
=25.14 %

* 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

Dean Foods Co had a gross margin of 25.14% for the quarter that ended in Dec. 2015 => Competition eroding margins


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.

Dean Foods Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross Margin 27.1323.1623.6527.9425.4721.5922.5920.5717.6124.31

Dean Foods Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Gross Margin 20.0519.4217.7816.6717.5618.4323.3224.6024.1925.14
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