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Esterline Technologies Corp (NYSE:ESL)
Gross Margin
31.85% (As of Mar. 2016)

Gross Margin is calculated as gross profit divided by its revenue. Esterline Technologies Corp's gross profit for the three months ended in Mar. 2016 was $156 Mil. Esterline Technologies Corp's revenue for the three months ended in Mar. 2016 was $490 Mil. Therefore, Esterline Technologies Corp's Gross Margin for the quarter that ended in Mar. 2016 was 31.85%.

ESL' s Gross Margin Range Over the Past 10 Years
Min: 30.83   Max: 36.86
Current: 32.54

30.83
36.86

During the past 13 years, the highest Gross Margin of Esterline Technologies Corp was 36.86%. The lowest was 30.83%. And the median was 32.73%.

ESL's Gross Margin is ranked higher than
70% of the 192 Companies
in the Global Aerospace & Defense industry.

( Industry Median: 23.80 vs. ESL: 32.54 )

Esterline Technologies Corp had a gross margin of 31.85% for the quarter that ended in Mar. 2016 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Esterline Technologies Corp was 2.60% per year.


Definition

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

Esterline Technologies Corp's Gross Margin for the fiscal year that ended in Oct. 2013 is calculated as

Gross Margin (A: Oct. 2013 )=Gross Profit (A: Oct. 2013 ) / Revenue (A: Oct. 2013 )
=726 / 1969.754
=(Revenue - Cost of Goods Sold) / Revenue
=(1969.754 - 1243.758) / 1969.754
=36.86 %

Esterline Technologies Corp'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 )
=156.2 / 490.31
=(Revenue - Cost of Goods Sold) / Revenue
=(490.31 - 334.137) / 490.31
=31.85 %

* 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

Esterline Technologies Corp had a gross margin of 31.85% 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.

Esterline Technologies Corp Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Gross Margin 32.0931.3630.9430.8333.0632.4033.8134.3336.0936.86

Esterline Technologies Corp Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Dec15Mar16
Gross Margin 40.6235.1335.0834.9835.3232.5632.7234.2231.2031.85
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