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Zoltek Companies, Inc. (NAS:ZOLT)
Gross Margin
15.04% (As of Dec. 2013)

Gross Margin is calculated as gross profit divided by its revenue. Zoltek Companies, Inc.'s gross profit for the three months ended in Dec. 2013 was \$5.3 Mil. Zoltek Companies, Inc.'s revenue for the three months ended in Dec. 2013 was \$35.1 Mil. Therefore, Zoltek Companies, Inc.'s Gross Margin for the quarter that ended in Dec. 2013 was 15.04%.

Zoltek Companies, Inc. had a gross margin of 15.04% for the quarter that ended in Dec. 2013 => No sustainable competitive advantage

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

Definition

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

Zoltek Companies, Inc.'s Gross Margin for the fiscal year that ended in Sep. 2013 is calculated as

 Gross Margin (A: Sep. 2013 ) = Gross Profit (A: Sep. 2013 ) / Revenue (A: Sep. 2013 ) = 29.8 / 140.451 = (Revenue - Cost of Goods Sold) / Revenue = (140.451 - 110.621) / 140.451 = 21.24 %

Zoltek Companies, Inc.'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 ) = 5.3 / 35.123 = (Revenue - Cost of Goods Sold) / Revenue = (35.123 - 29.842) / 35.123 = 15.04 %

* 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

Zoltek Companies, Inc. had a gross margin of 15.04% for the quarter that ended in Dec. 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.

Zoltek Companies, Inc. Annual Data

 Sep04 Sep05 Sep06 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Gross Margin 15.61 4.64 24.21 28.75 27.60 22.10 10.35 11.67 24.50 21.24

Zoltek Companies, Inc. Quarterly Data

 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Gross Margin 15.59 28.01 23.33 23.46 23.12 25.30 21.11 20.46 18.36 15.04
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