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Helmerich & Payne Inc (NYSE:HP)
Gross Margin
35.36% (As of Sep. 2016)

Gross Margin is calculated as gross profit divided by its revenue. Helmerich & Payne Inc's gross profit for the six months ended in Sep. 2016 was $117 Mil. Helmerich & Payne Inc's revenue for the six months ended in Sep. 2016 was $332 Mil. Therefore, Helmerich & Payne Inc's Gross Margin for the quarter that ended in Sep. 2016 was 35.36%.

HP' s Gross Margin Range Over the Past 10 Years
Min: 42.83   Max: 48.76
Current: 44.66

42.83
48.76

During the past 13 years, the highest Gross Margin of Helmerich & Payne Inc was 48.76%. The lowest was 42.83%. And the median was 45.66%.

HP's Gross Margin is ranked higher than
53% of the 66 Companies
in the Global Oil & Gas Drilling industry.

( Industry Median: 39.80 vs. HP: 44.66 )

Helmerich & Payne Inc had a gross margin of 35.36% for the quarter that ended in Sep. 2016 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Helmerich & Payne Inc was 0.70% per year.


Definition

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

Helmerich & Payne Inc's Gross Margin for the fiscal year that ended in Sep. 2016 is calculated as

Gross Margin (A: Sep. 2016 )=Gross Profit (A: Sep. 2016 ) / Revenue (A: Sep. 2016 )
=725.4 / 1624.232
=(Revenue - Cost of Goods Sold) / Revenue
=(1624.232 - 898.805) / 1624.232
=44.66 %

Helmerich & Payne Inc's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

Gross Margin (Q: Sep. 2016 )=Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 )
=117.3 / 331.708
=(Revenue - Cost of Goods Sold) / Revenue
=(331.708 - 214.404) / 331.708
=35.36 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Helmerich & Payne Inc had a gross margin of 35.36% for the quarter that ended in Sep. 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 local exchange's currency.

Helmerich & Payne Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
Gross Margin 47.0946.6448.7642.8343.6844.4645.3146.0046.1244.66

Helmerich & Payne Inc Semi-Annual Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Gross Margin 45.8845.2547.2647.2646.9941.0843.2949.4349.2135.36
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