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GuruFocus has detected 1 Warning Sign with Adecoagro SA $AGRO.
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Adecoagro SA (NYSE:AGRO)
Gross Profit
$303 Mil (TTM As of Mar. 2017)

Adecoagro SA's gross profit for the three months ended in Mar. 2017 was $44 Mil. Adecoagro SA's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $303 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Adecoagro SA's gross profit for the three months ended in Mar. 2017 was $44 Mil. Adecoagro SA's revenue for the three months ended in Mar. 2017 was $183 Mil. Therefore, Adecoagro SA's Gross Margin for the quarter that ended in Mar. 2017 was 23.94%.

Adecoagro SA had a gross margin of 23.94% for the quarter that ended in Mar. 2017 => Competition eroding margins

During the past 10 years, the highest Gross Margin of Adecoagro SA was 34.98%. The lowest was 13.08%. And the median was 24.75%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Adecoagro SA's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=994.691 - 684.422
=310

Adecoagro SA's Gross Profit for the quarter that ended in Mar. 2017 is calculated as

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=183.229 - 139.362
=44

Adecoagro SA Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 84.448 (Jun. 2016 ) + 75.599 (Sep. 2016 ) + 99.269 (Dec. 2016 ) + 43.867 (Mar. 2017 ) = $303 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Adecoagro SA's Gross Margin for the quarter that ended in Mar. 2017 is calculated as

Gross Margin (Q: Mar. 2017 )=Gross Profit (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=44 / 183.229
=23.94 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Adecoagro SA had a gross margin of 23.94% for the quarter that ended in Mar. 2017 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Adecoagro SA Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 46748853226148127221186310

Adecoagro SA Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 71184652695184769944
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