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National Grid PLC (NYSE:NGG)
Gross Margin
25.71% (As of Sep. 2014)

Gross Margin is calculated as gross profit divided by its revenue. National Grid PLC's gross profit for the six months ended in Sep. 2014 was $2,664 Mil. National Grid PLC's revenue for the six months ended in Sep. 2014 was $10,365 Mil. Therefore, National Grid PLC's Gross Margin for the quarter that ended in Sep. 2014 was 25.71%.

Warning Sign:

National Grid PLC gross margin has been in long term decline. The average rate of decline per year is -9.2%.

NGG' s 10-Year Gross Margin Range
Min: 25.22   Max: 50.49
Current: 26.54

25.22
50.49

During the past 13 years, the highest Gross Margin of National Grid PLC was 50.49%. The lowest was 25.22%. And the median was 33.14%.

NGG's Gross Marginis ranked lower than
100% of the Companies
in the Global Utilities - Diversified industry.

( Industry Median: vs. NGG: 26.54 )

National Grid PLC had a gross margin of 25.71% for the quarter that ended in Sep. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for National Grid PLC was -9.20% per year.


Definition

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

National Grid PLC's Gross Margin for the fiscal year that ended in Mar. 2014 is calculated as

Gross Margin (A: Mar. 2014 )=Gross Profit (A: Mar. 2014 ) / Revenue (A: Mar. 2014 )
=6204.3 / 24599.6677741
=(Revenue - Cost of Goods Sold) / Revenue
=(24599.6677741 - 18395.3488372) / 24599.6677741
=25.22 %

National Grid PLC's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=2664.5 / 10364.8208469
=(Revenue - Cost of Goods Sold) / Revenue
=(10364.8208469 - 7700.3257329) / 10364.8208469
=25.71 %

* 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

National Grid PLC had a gross margin of 25.71% for the quarter that ended in Sep. 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.

National Grid PLC Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Gross Margin 0.0050.4928.6344.0333.1442.0445.2725.5926.1425.22

National Grid PLC Semi-Annual Data

Mar10Sep10Mar11Sep11Mar12Sep12Mar13Sep13Mar14Sep14
Gross Margin 56.4224.5662.1223.6627.2028.6624.3022.8427.2025.71
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