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The Scotts Miracle Gro Co (NYSE:SMG)
Gross Margin
41.89% (As of Mar. 2016)

Gross Margin is calculated as gross profit divided by its revenue. The Scotts Miracle Gro Co's gross profit for the three months ended in Mar. 2016 was $522 Mil. The Scotts Miracle Gro Co's revenue for the three months ended in Mar. 2016 was $1,245 Mil. Therefore, The Scotts Miracle Gro Co's Gross Margin for the quarter that ended in Mar. 2016 was 41.89%.

SMG' s Gross Margin Range Over the Past 10 Years
Min: 31.51   Max: 36.54
Current: 36.58

31.51
36.54

During the past 13 years, the highest Gross Margin of The Scotts Miracle Gro Co was 36.54%. The lowest was 31.51%. And the median was 35.14%.

SMG's Gross Margin is ranked higher than
68% of the 208 Companies
in the Global Agricultural Inputs industry.

( Industry Median: 25.93 vs. SMG: 36.58 )

The Scotts Miracle Gro Co had a gross margin of 41.89% for the quarter that ended in Mar. 2016 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for The Scotts Miracle Gro Co was -0.20% per year.


Definition

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

The Scotts Miracle Gro Co's Gross Margin for the fiscal year that ended in Sep. 2015 is calculated as

Gross Margin (A: Sep. 2015 )=Gross Profit (A: Sep. 2015 ) / Revenue (A: Sep. 2015 )
=1064.9 / 3016.5
=(Revenue - Cost of Goods Sold) / Revenue
=(3016.5 - 1951.6) / 3016.5
=35.30 %

The Scotts Miracle Gro Co's Gross Margin for the quarter that ended in Mar. 2016 is calculated as

Gross Margin (Q: Mar. 2016 )=Gross Profit (Q: Mar. 2016 ) / Revenue (Q: Mar. 2016 )
=521.6 / 1245.2
=(Revenue - Cost of Goods Sold) / Revenue
=(1245.2 - 723.6) / 1245.2
=41.89 %

* 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

The Scotts Miracle Gro Co had a gross margin of 41.89% for the quarter that ended in Mar. 2016 => 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.

The Scotts Miracle Gro Co Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
Gross Margin 35.4434.9831.5134.6636.5435.3734.0234.8836.3035.30

The Scotts Miracle Gro Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Gross Margin 17.8840.1337.9230.9013.5539.6336.9831.6817.3441.89
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