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International Game Technology (NYSE:IGT)
Gross Margin
60.93% (As of Jun. 2014)

Gross Margin is calculated as gross profit divided by its revenue. International Game Technology's gross profit for the three months ended in Jun. 2014 was $285 Mil. International Game Technology's revenue for the three months ended in Jun. 2014 was $468 Mil. Therefore, International Game Technology's Gross Margin for the quarter that ended in Jun. 2014 was 60.93%.

IGT' s 10-Year Gross Margin Range
Min: 40.47   Max: 58.17
Current: 57.76

40.47
58.17

During the past 13 years, the highest Gross Margin of International Game Technology was 58.17%. The lowest was 40.47%. And the median was 50.75%.

IGT's Gross Marginis ranked lower than
100% of the Companies
in the Global Electronic Gaming & Multimedia industry.

( Industry Median: vs. IGT: 57.76 )

International Game Technology had a gross margin of 60.93% for the quarter that ended in Jun. 2014 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for International Game Technology was 0.70% per year.


Definition

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

International Game Technology's Gross Margin for the fiscal year that ended in Sep. 2013 is calculated as

Gross Margin (A: Sep. 2013 )=Gross Profit (A: Sep. 2013 ) / Revenue (A: Sep. 2013 )
=1344.4 / 2341.6
=(Revenue - Cost of Goods Sold) / Revenue
=(2341.6 - 997.2) / 2341.6
=57.41 %

International Game Technology's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=284.9 / 467.6
=(Revenue - Cost of Goods Sold) / Revenue
=(467.6 - 182.7) / 467.6
=60.93 %

* 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

International Game Technology had a gross margin of 60.93% for the quarter that ended in Jun. 2014 => 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.

International Game Technology Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Gross Margin 53.0950.0454.6156.4956.3955.1656.7158.1757.5457.41

International Game Technology Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross Margin 57.9556.7958.5358.3656.8858.2456.4057.2457.1060.93
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