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GuruFocus has detected 4 Warning Signs with B/E Aerospace Inc $BEAV.
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B/E Aerospace Inc (NAS:BEAV)
Gross Profit
$1,133 Mil (TTM As of Dec. 2016)

B/E Aerospace Inc's gross profit for the three months ended in Dec. 2016 was $273 Mil. B/E Aerospace Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $1,133 Mil.

Gross Margin is calculated as gross profit divided by its revenue. B/E Aerospace Inc's gross profit for the three months ended in Dec. 2016 was $273 Mil. B/E Aerospace Inc's revenue for the three months ended in Dec. 2016 was $730 Mil. Therefore, B/E Aerospace Inc's Gross Margin for the quarter that ended in Dec. 2016 was 37.35%.

B/E Aerospace Inc had a gross margin of 37.35% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of B/E Aerospace Inc was 39.83%. The lowest was 33.98%. And the median was 37.59%.


Definition

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

B/E Aerospace Inc'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
=2932.9 - 1799.5
=1,133

B/E Aerospace Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=730.4 - 457.6
=273

B/E Aerospace Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 280.1 (Mar. 2016 ) + 305.3 (Jun. 2016 ) + 275.2 (Sep. 2016 ) + 272.8 (Dec. 2016 ) = $1,133 Mil.

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

B/E Aerospace Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=273 / 730.4
=37.35 %

* 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

B/E Aerospace Inc had a gross margin of 37.35% for the quarter that ended in Dec. 2016 => 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.

B/E Aerospace Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 5707246697219361,1641,3291,0161,0871,133

B/E Aerospace Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 366-134288281255263280305275273
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