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Stewart Enterprises, Inc. (NAS:STEI)
Gross Margin
18.25% (As of Jul. 2013)

Gross Margin is calculated as gross profit divided by its revenue. Stewart Enterprises, Inc.'s gross profit for the three months ended in Jul. 2013 was \$23.2 Mil. Stewart Enterprises, Inc.'s revenue for the three months ended in Jul. 2013 was \$127.1 Mil. Therefore, Stewart Enterprises, Inc.'s Gross Margin for the quarter that ended in Jul. 2013 was 18.25%.

Stewart Enterprises, Inc. had a gross margin of 18.25% for the quarter that ended in Jul. 2013 => No sustainable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Stewart Enterprises, Inc. was 0.00% per year.

Definition

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

Stewart Enterprises, Inc.'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 ) = 109.7 / 516.097 = (Revenue - Cost of Goods Sold) / Revenue = (516.097 - 406.415) / 516.097 = 21.25 %

Stewart Enterprises, Inc.'s Gross Margin for the quarter that ended in Jul. 2013 is calculated as

 Gross Margin (Q: Jul. 2013 ) = Gross Profit (Q: Jul. 2013 ) / Revenue (Q: Jul. 2013 ) = 23.2 / 127.062 = (Revenue - Cost of Goods Sold) / Revenue = (127.062 - 103.867) / 127.062 = 18.25 %

* 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

Stewart Enterprises, Inc. had a gross margin of 18.25% for the quarter that ended in Jul. 2013 => 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

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Stewart Enterprises, Inc. Annual Data

 Oct04 Oct05 Oct06 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Gross Margin 23.30 20.76 22.29 21.50 19.12 18.01 19.35 19.59 21.25 21.68

Stewart Enterprises, Inc. Quarterly Data

 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Gross Margin 17.49 19.07 20.35 21.97 20.88 21.76 23.82 23.88 18.25 20.50
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