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Toll Brothers Inc (NYSE:TOL)
Gross Margin
21.93% (As of Jul. 2016)

Gross Margin is calculated as gross profit divided by its revenue. Toll Brothers Inc's gross profit for the three months ended in Jul. 2016 was $279 Mil. Toll Brothers Inc's revenue for the three months ended in Jul. 2016 was $1,270 Mil. Therefore, Toll Brothers Inc's Gross Margin for the quarter that ended in Jul. 2016 was 21.93%.

TOL' s Gross Margin Range Over the Past 10 Years
Min: -11.17   Max: 21.62
Current: 19.84

-11.17
21.62

During the past 13 years, the highest Gross Margin of Toll Brothers Inc was 21.62%. The lowest was -11.17%. And the median was 16.61%.

TOL's Gross Margin is ranked higher than
52% of the 759 Companies
in the Global Residential Construction industry.

( Industry Median: 21.61 vs. TOL: 19.84 )

Toll Brothers Inc had a gross margin of 21.93% for the quarter that ended in Jul. 2016 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Toll Brothers Inc was 6.00% per year.


Definition

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

Toll Brothers Inc's Gross Margin for the fiscal year that ended in Oct. 2015 is calculated as

Gross Margin (A: Oct. 2015 )=Gross Profit (A: Oct. 2015 ) / Revenue (A: Oct. 2015 )
=902 / 4171.248
=(Revenue - Cost of Goods Sold) / Revenue
=(4171.248 - 3269.27) / 4171.248
=21.62 %

Toll Brothers Inc's Gross Margin for the quarter that ended in Jul. 2016 is calculated as

Gross Margin (Q: Jul. 2016 )=Gross Profit (Q: Jul. 2016 ) / Revenue (Q: Jul. 2016 )
=278.5 / 1269.934
=(Revenue - Cost of Goods Sold) / Revenue
=(1269.934 - 991.416) / 1269.934
=21.93 %

* 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

Toll Brothers Inc had a gross margin of 21.93% for the quarter that ended in Jul. 2016 => 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 local exchange's currency.

Toll Brothers Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Gross Margin 28.1011.180.90-11.177.9114.5818.6320.2321.2121.62

Toll Brothers Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Gross Margin 22.6721.3323.8320.4219.8122.3323.2921.9621.9315.40
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