Formula
Operating Margin = (
Revenue -
Cost of Goods Sold -
Selling, General, & Admin. Expense (SGA) -
Research & Development -
Depreciation, Depletion and Amortization) /
RevenueHalliburton Company operatingmargin Calculation
* All numbers are in millions except for per share dataHalliburton Company Annual Data
| Dec03 | Dec04 | Dec05 | Dec06 | Dec07 | Dec08 | Dec09 | Dec10 | Dec11 | Dec12 |
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| operatingmargin |  | | | | | | | | | |
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Halliburton Company Quarterly Data
| Dec10 | Mar11 | Jun11 | Sep11 | Dec11 | Mar12 | Jun12 | Sep12 | Dec12 | Mar13 |
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| operatingmargin | | | | | | | | | | |
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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.
Beaware
Compared with a companys 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 companys 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 Nokias 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. GuruFocuss
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,
Revenue,
Cost of Goods Sold,
Selling, General, & Admin. Expense (SGA),
Research & Development,
Depreciation, Depletion and Amortization* All numbers are in millions except for per share dataHalliburton Company Annual Data
| Dec03 | Dec04 | Dec05 | Dec06 | Dec07 | Dec08 | Dec09 | Dec10 | Dec11 | Dec12 |
|---|
| operatingmargin | | | | | | | | | | |
|---|
Halliburton Company Quarterly Data
| Dec10 | Mar11 | Jun11 | Sep11 | Dec11 | Mar12 | Jun12 | Sep12 | Dec12 | Mar13 |
|---|
| operatingmargin | | | | | | | | | | |
|---|
European Shorting
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