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United Parcel Service Inc (UPS) (NYSE:UPS)
Gross Margin
89.16% (As of Dec. 2013)

Gross Margin is calculated as gross profit divided by its revenue. United Parcel Service Inc (UPS)'s gross profit for the three months ended in Dec. 2013 was $13,353 Mil. United Parcel Service Inc (UPS)'s revenue for the three months ended in Dec. 2013 was $14,976 Mil. Therefore, United Parcel Service Inc (UPS)'s Gross Margin for the quarter that ended in Dec. 2013 was 89.16%.

UPS' s 10-Year Gross Margin Range
Min: 70.81   Max: 80.53
Current: 79.23

70.81
80.53

During the past 13 years, the highest Gross Margin of United Parcel Service Inc (UPS) was 80.53%. The lowest was 70.81%. And the median was 76.64%.

UPS's Gross Marginis ranked lower than
100% of the Companies
in the Global Integrated Shipping & Logistics industry.

( Industry Median: vs. UPS: 79.23 )

United Parcel Service Inc (UPS) had a gross margin of 89.16% for the quarter that ended in Dec. 2013 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for United Parcel Service Inc (UPS) was 0.20% per year.


Definition

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

United Parcel Service Inc (UPS)'s Gross Margin for the fiscal year that ended in Dec. 2013 is calculated as

Gross Margin (A: Dec. 2013 )=Gross Profit (A: Dec. 2013 ) / Revenue (A: Dec. 2013 )
=43925 / 55438
=(Revenue - Cost of Goods Sold) / Revenue
=(55438 - 11513) / 55438
=79.23 %

United Parcel Service Inc (UPS)'s Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=13353 / 14976
=(Revenue - Cost of Goods Sold) / Revenue
=(14976 - 1623) / 14976
=89.16 %

* 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

United Parcel Service Inc (UPS) had a gross margin of 89.16% for the quarter that ended in Dec. 2013 => 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.

United Parcel Service Inc (UPS) Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross Margin 70.810.0080.4379.8176.9380.5378.3276.3478.8679.23

United Parcel Service Inc (UPS) Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross Margin 76.1975.8476.8377.1575.2388.5976.9677.5575.7089.16
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