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Dow Chemical Co (NYSE:DOW)
Gross Margin
25.71% (As of Mar. 2016)

Gross Margin is calculated as gross profit divided by its revenue. Dow Chemical Co's gross profit for the three months ended in Mar. 2016 was $2,752 Mil. Dow Chemical Co's revenue for the three months ended in Mar. 2016 was $10,703 Mil. Therefore, Dow Chemical Co's Gross Margin for the quarter that ended in Mar. 2016 was 25.71%.

DOW' s Gross Margin Range Over the Past 10 Years
Min: 9.55   Max: 18.4
Current: 23.05

9.55
18.4

During the past 13 years, the highest Gross Margin of Dow Chemical Co was 18.40%. The lowest was 9.55%. And the median was 15.20%.

DOW's Gross Margin is ranked lower than
52% of the 1049 Companies
in the Global Chemicals industry.

( Industry Median: 23.50 vs. DOW: 23.05 )

Dow Chemical Co had a gross margin of 25.71% for the quarter that ended in Mar. 2016 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Dow Chemical Co was 6.70% per year.


Definition

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

Dow Chemical Co's Gross Margin for the fiscal year that ended in Dec. 2014 is calculated as

Gross Margin (A: Dec. 2014 )=Gross Profit (A: Dec. 2014 ) / Revenue (A: Dec. 2014 )
=10703 / 58167
=(Revenue - Cost of Goods Sold) / Revenue
=(58167 - 47464) / 58167
=18.40 %

Dow Chemical Co's Gross Margin for the quarter that ended in Mar. 2016 is calculated as

Gross Margin (Q: Mar. 2016 )=Gross Profit (Q: Mar. 2016 ) / Revenue (Q: Mar. 2016 )
=2752 / 10703
=(Revenue - Cost of Goods Sold) / Revenue
=(10703 - 7951) / 10703
=25.71 %

* 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

Dow Chemical Co had a gross margin of 25.71% for the quarter that ended in Mar. 2016 => 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.

Dow Chemical Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross Margin 15.4713.299.5512.7614.7114.9315.8416.6218.4022.43

Dow Chemical Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Gross Margin 16.1118.8617.2518.2519.2822.9221.4122.3223.1725.71
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