Switch to:
Xyratex, Ltd. (NAS:XRTX)
Gross Margin
22.19% (As of Nov. 2013)

Gross Margin is calculated as gross profit divided by its revenue. Xyratex, Ltd.'s gross profit for the three months ended in Nov. 2013 was \$41.1 Mil. Xyratex, Ltd.'s revenue for the three months ended in Nov. 2013 was \$185.3 Mil. Therefore, Xyratex, Ltd.'s Gross Margin for the quarter that ended in Nov. 2013 was 22.19%.

Xyratex, Ltd. had a gross margin of 22.19% for the quarter that ended in Nov. 2013 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Xyratex, Ltd. was 0.00% per year.

Definition

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

Xyratex, Ltd.'s Gross Margin for the fiscal year that ended in Nov. 2013 is calculated as

 Gross Margin (A: Nov. 2013 ) = Gross Profit (A: Nov. 2013 ) / Revenue (A: Nov. 2013 ) = 171.1 / 814.318 = (Revenue - Cost of Goods Sold) / Revenue = (814.318 - 643.237) / 814.318 = 21.01 %

Xyratex, Ltd.'s Gross Margin for the quarter that ended in Nov. 2013 is calculated as

 Gross Margin (Q: Nov. 2013 ) = Gross Profit (Q: Nov. 2013 ) / Revenue (Q: Nov. 2013 ) = 41.1 / 185.254 = (Revenue - Cost of Goods Sold) / Revenue = (185.254 - 144.139) / 185.254 = 22.19 %

* 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

Xyratex, Ltd. had a gross margin of 22.19% for the quarter that ended in Nov. 2013 => 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

Historical Data

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

Xyratex, Ltd. Annual Data

 Nov04 Nov05 Nov06 Nov07 Nov08 Nov09 Nov10 Nov11 Nov12 Nov13 Gross Margin 20.62 21.23 20.06 18.15 15.11 14.43 17.46 15.33 16.90 21.01

Xyratex, Ltd. Quarterly Data

 Aug11 Nov11 Feb12 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Gross Margin 16.68 17.70 17.94 16.54 18.51 14.51 18.88 21.99 20.94 22.19
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)