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Esterline Technologies (NYSE:ESL)
Gross Margin
34.36% (As of Jul. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Esterline Technologies's gross profit for the three months ended in Jul. 2014 was $182 Mil. Esterline Technologies's revenue for the three months ended in Jul. 2014 was $531 Mil. Therefore, Esterline Technologies's Gross Margin for the quarter that ended in Jul. 2014 was 34.36%.

ESL' s 10-Year Gross Margin Range
Min: 30.91   Max: 44.81
Current: 35.41

30.91
44.81

During the past 13 years, the highest Gross Margin of Esterline Technologies was 44.81%. The lowest was 30.91%. And the median was 34.33%.

ESL's Gross Marginis ranked lower than
100% of the Companies
in the Global Aerospace & Defense industry.

( Industry Median: vs. ESL: 35.41 )

Esterline Technologies had a gross margin of 34.36% for the quarter that ended in Jul. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for Esterline Technologies was 2.60% per year.


Definition

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

Esterline Technologies'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's Gross Margin for the quarter that ended in Jul. 2014 is calculated as

Gross Margin (Q: Jul. 2014 )=Gross Profit (Q: Jul. 2014 ) / Revenue (Q: Jul. 2014 )
=182.5 / 531.124
=(Revenue - Cost of Goods Sold) / Revenue
=(531.124 - 348.651) / 531.124
=34.36 %

* 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 had a gross margin of 34.36% for the quarter that ended in Jul. 2014 => 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 Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Gross Margin 31.7831.3631.1830.9133.0632.4033.8134.3336.0936.86

Esterline Technologies Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Gross Margin 36.5535.4138.4935.0136.3137.4238.4534.3234.4334.36
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