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Forest City Enterprises Inc (NYSE:FCE.A)
Gross Margin
44.23% (As of Jun. 2015)

Gross Margin is calculated as gross profit divided by its revenue. Forest City Enterprises Inc's gross profit for the three months ended in Jun. 2015 was $114.9 Mil. Forest City Enterprises Inc's revenue for the three months ended in Jun. 2015 was $259.8 Mil. Therefore, Forest City Enterprises Inc's Gross Margin for the quarter that ended in Jun. 2015 was 44.23%.

Warning Sign:

Forest City Enterprises Inc gross margin has been in long term decline. The average rate of decline per year is -1.6%.

FCE.A' s 10-Year Gross Margin Range
Min: 35.46   Max: 43
Current: 41.68

35.46
43

During the past 13 years, the highest Gross Margin of Forest City Enterprises Inc was 43.00%. The lowest was 35.46%. And the median was 39.08%.

FCE.A's Gross Marginis ranked lower than
100% of the Companies
in the Global Real Estate - General industry.

( Industry Median: vs. FCE.A: 41.68 )

Forest City Enterprises Inc had a gross margin of 44.23% for the quarter that ended in Jun. 2015 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for Forest City Enterprises Inc was -1.60% per year.


Definition

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

Forest City Enterprises Inc'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 )
=382.9 / 966.052
=(Revenue - Cost of Goods Sold) / Revenue
=(966.052 - 583.177) / 966.052
=39.63 %

Forest City Enterprises Inc's Gross Margin for the quarter that ended in Jun. 2015 is calculated as

Gross Margin (Q: Jun. 2015 )=Gross Profit (Q: Jun. 2015 ) / Revenue (Q: Jun. 2015 )
=114.9 / 259.759
=(Revenue - Cost of Goods Sold) / Revenue
=(259.759 - 144.868) / 259.759
=44.23 %

* 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

Forest City Enterprises Inc had a gross margin of 44.23% for the quarter that ended in Jun. 2015 => 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.

Forest City Enterprises Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Dec14
Gross Margin 0.000.000.0039.0839.0343.0041.7738.6335.4639.63

Forest City Enterprises Inc Quarterly Data

Mar13Apr13Jul13Oct13Mar14Jun14Sep14Dec14Mar15Jun15
Gross Margin 31.7432.0034.4021.0236.0640.8941.9039.9140.5644.23
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