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Iridex Corp (NAS:IRIX)
Gross Margin
48.94% (As of Mar. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Iridex Corp's gross profit for the three months ended in Mar. 2014 was $5.06 Mil. Iridex Corp's revenue for the three months ended in Mar. 2014 was $10.33 Mil. Therefore, Iridex Corp's Gross Margin for the quarter that ended in Mar. 2014 was 48.94%.

IRIX' s 10-Year Gross Margin Range
Min: 40.55   Max: 69.32
Current: 48.28

40.55
69.32

During the past 13 years, the highest Gross Margin of Iridex Corp was 69.32%. The lowest was 40.55%. And the median was 49.64%.

IRIX's Gross Marginis ranked lower than
100% of the Companies
in the Global Medical Devices industry.

( Industry Median: vs. IRIX: 48.28 )

Iridex Corp had a gross margin of 48.94% for the quarter that ended in Mar. 2014 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for Iridex Corp was 3.10% per year.


Definition

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

Iridex Corp's Gross Margin for the fiscal year that ended in Dec. 2012 is calculated as

Gross Margin (A: Dec. 2012 )=Gross Profit (A: Dec. 2012 ) / Revenue (A: Dec. 2012 )
=16.3 / 33.859
=(Revenue - Cost of Goods Sold) / Revenue
=(33.859 - 17.513) / 33.859
=48.28 %

Iridex Corp's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=5.1 / 10.329
=(Revenue - Cost of Goods Sold) / Revenue
=(10.329 - 5.274) / 10.329
=48.94 %

* 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

Iridex Corp had a gross margin of 48.94% for the quarter that ended in Mar. 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.

Iridex Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross Margin 45.3849.0852.3843.7340.5550.1550.1549.1348.2848.56

Iridex Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross Margin 49.6348.0048.6849.6347.0147.3348.6649.5948.5948.94
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