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Spartech Corporation (NYSE:SEH)
Gross Margin
11.41% (As of Oct. 2012)

Gross Margin is calculated as gross profit divided by its revenue. Spartech Corporation's gross profit for the three months ended in Oct. 2012 was $33 Mil. Spartech Corporation's revenue for the three months ended in Oct. 2012 was $287 Mil. Therefore, Spartech Corporation's Gross Margin for the quarter that ended in Oct. 2012 was 11.41%.

SEH' s 10-Year Gross Margin Range
Min: 0   Max: 0
Current: 0

SEH's Gross Marginis ranked lower than
100% of the Companies
in the Global Rubber & Plastics industry.

( Industry Median: vs. SEH: 0.00 )

Spartech Corporation had a gross margin of 11.41% for the quarter that ended in Oct. 2012 => No sustainable competitive advantage

The 3-Year average Growth Rate of Gross Margin for Spartech Corporation was 0.00% per year.


Definition

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

Spartech Corporation's Gross Margin for the fiscal year that ended in Oct. 2012 is calculated as

Gross Margin (A: Oct. 2012 )=Gross Profit (A: Oct. 2012 ) / Revenue (A: Oct. 2012 )
=111.4 / 1149.355
=(Revenue - Cost of Goods Sold) / Revenue
=(1149.355 - 1037.991) / 1149.355
=9.69 %

Spartech Corporation's Gross Margin for the quarter that ended in Oct. 2012 is calculated as

Gross Margin (Q: Oct. 2012 )=Gross Profit (Q: Oct. 2012 ) / Revenue (Q: Oct. 2012 )
=32.7 / 286.804
=(Revenue - Cost of Goods Sold) / Revenue
=(286.804 - 254.067) / 286.804
=11.41 %

* 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

Spartech Corporation had a gross margin of 11.41% for the quarter that ended in Oct. 2012 => No sustainable 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.

Spartech Corporation Annual Data

Oct03Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12
Gross Margin 14.0213.8010.9211.8811.279.0012.5510.628.839.69

Spartech Corporation Quarterly Data

Jul10Oct10Jan11Apr11Jul11Oct11Jan12Apr12Jul12Oct12
Gross Margin 10.368.857.849.589.148.607.6910.009.6111.41
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