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GuruFocus has detected 5 Warning Signs with Constellation Brands Inc $STZ.
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Constellation Brands Inc (NYSE:STZ)
Gross Margin %
48.38% (As of Feb. 2017)

Gross Margin is calculated as gross profit divided by its revenue. Constellation Brands Inc's gross profit for the three months ended in Feb. 2017 was $788 Mil. Constellation Brands Inc's revenue for the three months ended in Feb. 2017 was $1,628 Mil. Therefore, Constellation Brands Inc's Gross Margin for the quarter that ended in Feb. 2017 was 48.38%.

STZ' s Gross Margin % Range Over the Past 10 Years
Min: 33.66   Max: 48.14
Current: 48.14

33.66
48.14

During the past 13 years, the highest Gross Margin of Constellation Brands Inc was 48.14%. The lowest was 33.66%. And the median was 39.83%.

STZ's Gross Margin % is ranked higher than
59% of the 212 Companies
in the Global Beverages - Wineries & Distilleries industry.

( Industry Median: 42.12 vs. STZ: 48.14 )

Constellation Brands Inc had a gross margin of 48.38% for the quarter that ended in Feb. 2017 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Constellation Brands Inc was 3.90% per year.


Definition

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

Constellation Brands Inc's Gross Margin for the fiscal year that ended in Feb. 2017 is calculated as

Gross Margin (A: Feb. 2017 )=Gross Profit (A: Feb. 2017 ) / Revenue (A: Feb. 2017 )
=3529.4 / 7331.5
=(Revenue - Cost of Goods Sold) / Revenue
=(7331.5 - 3802.1) / 7331.5
=48.14 %

Constellation Brands Inc's Gross Margin for the quarter that ended in Feb. 2017 is calculated as

Gross Margin (Q: Feb. 2017 )=Gross Profit (Q: Feb. 2017 ) / Revenue (Q: Feb. 2017 )
=787.7 / 1628
=(Revenue - Cost of Goods Sold) / Revenue
=(1628 - 840.3) / 1628
=48.38 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Constellation Brands Inc had a gross margin of 48.38% for the quarter that ended in Feb. 2017 => 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 local exchange's currency.

Constellation Brands Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
Gross Margin 33.9733.6634.0235.7240.0139.6440.9242.7844.9348.14

Constellation Brands Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
Gross Margin 41.4444.0645.1844.7444.7145.1147.0847.9449.2448.38
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