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PSS World Medical, Inc. (NAS:PSSI)
Operating Margin
6.41% (As of Sep. 2012)

Operating margin is calculated as operating income divided by its revenue. PSS World Medical, Inc.'s operating income for the six months ended in Sep. 2012 was $27 Mil. PSS World Medical, Inc.'s revenue for the six months ended in Sep. 2012 was $421 Mil. Therefore, PSS World Medical, Inc.'s operating margin for the quarter that ended in Sep. 2012 was 6.41%.

Good Sign:

PSS World Medical, Inc. operating margin is expanding. Margin expansion is usually a good sign.

PSSI' s 10-Year Operating Margin Range
Min: -1.5   Max: 6.6
Current: 6.3

-1.5
6.6
PSSI's Operating Marginis ranked lower than
69% of the 48 Companies
in the Global Medical Distribution industry.

( Industry Median: 3.29 vs. PSSI: 6.30 )

PSS World Medical, Inc.'s 3-Year Average operating margin Growth Rate was 7.20% per year.

PSS World Medical, Inc.'s operating income for the six months ended in Sep. 2012 was $27 Mil. Its operating income for the trailing twelve months (TTM) ended in Sep. 2012 was $133 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.

PSS World Medical, Inc.'s Operating Margin for the fiscal year that ended in Mar. 2012 is calculated as

Operating Margin=Operating Income (A: Mar. 2012 ) / Revenue (A: Mar. 2012 )
=133.356 / 2102.002
=6.34 %

PSS World Medical, Inc.'s Operating Margin for the quarter that ended in Sep. 2012 is calculated as

Operating Margin=Operating Income (Q: Sep. 2012 ) / Revenue (Q: Sep. 2012 )
=26.971 / 420.798
=6.41 %

* 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.

PSS World Medical, Inc. Annual Data

Mar03Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12
Operating Margin 2.203.544.184.474.744.985.185.896.566.34

PSS World Medical, Inc. Semi-Annual Data

Jun10Sep10Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12
Operating Margin 5.277.146.806.945.166.956.586.655.196.41
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