Switch to:
American Pacific Corporation (NAS:APFC)
Operating Margin
29.53% (As of Sep. 2013)

Operating margin is calculated as operating income divided by its revenue. American Pacific Corporation's operating income for the three months ended in Sep. 2013 was $17.5 Mil. American Pacific Corporation's revenue for the three months ended in Sep. 2013 was $59.2 Mil. Therefore, American Pacific Corporation's operating margin for the quarter that ended in Sep. 2013 was 29.53%.

Good Sign:

American Pacific Corporation operating margin is expanding. Margin expansion is usually a good sign.

APFC' s 10-Year Operating Margin Range
Min: -131.44   Max: 24.74
Current: 19.1

-131.44
24.74
APFC's Operating Marginis ranked higher than
95% of the 1010 Companies
in the Global Specialty Chemicals industry.

( Industry Median: 5.85 vs. APFC: 19.10 )

American Pacific Corporation's 3-Year Average operating margin Growth Rate was 35.30% per year.

American Pacific Corporation's operating income for the three months ended in Sep. 2013 was $17.5 Mil. Its operating income for the trailing twelve months (TTM) ended in Sep. 2013 was $41.1 Mil.


Definition

Operating margin - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.

American Pacific Corporation's Operating Margin for the fiscal year that ended in Sep. 2013 is calculated as

Operating Margin=Operating Income (A: Sep. 2013 ) / Revenue (A: Sep. 2013 )
=41.089 / 215.085
=19.10 %

American Pacific Corporation's Operating Margin for the quarter that ended in Sep. 2013 is calculated as

Operating Margin=Operating Income (Q: Sep. 2013 ) / Revenue (Q: Sep. 2013 )
=17.485 / 59.204
=29.53 %

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


Explanation

Just like Gross Margin, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.


Be Aware

Compared with a company’s EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company’s revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)’s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia’s Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus’s Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.


Related Terms

Gross Margin, Operating Income, Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense (SGA), Research & Development, Depreciation, Depletion and Amortization


Historical Data

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

American Pacific Corporation Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Operating Margin -3.74-29.952.1612.9712.250.935.004.9115.1419.10

American Pacific Corporation Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13
Operating Margin -11.6326.927.1712.0119.0619.2813.629.6819.8729.53
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)
Free 7-day Trial
FEEDBACK