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Kayne Anderson Energy Development Company (NYSE:KED)
Operating Margin
32.04% (As of Feb. 2012)

Operating margin is calculated as operating income divided by its revenue. Kayne Anderson Energy Development Company's operating income for the three months ended in Feb. 2012 was $0.88 Mil. Kayne Anderson Energy Development Company's revenue for the three months ended in Feb. 2012 was $2.74 Mil. Therefore, Kayne Anderson Energy Development Company's operating margin for the quarter that ended in Feb. 2012 was 32.04%.

KED' s 10-Year Operating Margin Range
Min: 0   Max: 0
Current: 0

KED's Operating Marginis ranked lower than
87% of the 1323 Companies
in the Global Asset Management industry.

( Industry Median: 46.77 vs. KED: 0.00 )

Kayne Anderson Energy Development Company's 3-Year Average operating margin Growth Rate was 0.00% per year.

Kayne Anderson Energy Development Company's operating income for the three months ended in Feb. 2012 was $0.88 Mil. Its operating income for the trailing twelve months (TTM) ended in Feb. 2012 was $5.34 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.

Kayne Anderson Energy Development Company's Operating Margin for the fiscal year that ended in Nov. 2011 is calculated as

Operating Margin=Operating Income (A: Nov. 2011 ) / Revenue (A: Nov. 2011 )
=4.064 / 11.199
=36.29 %

Kayne Anderson Energy Development Company's Operating Margin for the quarter that ended in Feb. 2012 is calculated as

Operating Margin=Operating Income (Q: Feb. 2012 ) / Revenue (Q: Feb. 2012 )
=0.877 / 2.737
=32.04 %

* 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.

Kayne Anderson Energy Development Company Annual Data

Nov07Nov08Nov09Nov10Nov11
Operating Margin 0.000.000.000.000.0033.58-298.7224.61-96.9336.29

Kayne Anderson Energy Development Company Quarterly Data

Nov09Feb10May10Aug10Nov10Feb11May11Aug11Nov11Feb12
Operating Margin 0.00-32.300.000.000.000.0060.8721.4837.4032.04
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