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GuruFocus has detected 6 Warning Signs with Chicago Bridge & Iron Co NV $CBI.
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Chicago Bridge & Iron Co NV (NYSE:CBI)
Gross Profit
$889 Mil (TTM As of Mar. 2017)

Chicago Bridge & Iron Co NV's gross profit for the three months ended in Mar. 2017 was $151 Mil. Chicago Bridge & Iron Co NV's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $889 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Chicago Bridge & Iron Co NV's gross profit for the three months ended in Mar. 2017 was $151 Mil. Chicago Bridge & Iron Co NV's revenue for the three months ended in Mar. 2017 was $1,827 Mil. Therefore, Chicago Bridge & Iron Co NV's Gross Margin for the quarter that ended in Mar. 2017 was 8.26%.

Chicago Bridge & Iron Co NV had a gross margin of 8.26% for the quarter that ended in Mar. 2017 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Chicago Bridge & Iron Co NV was 13.51%. The lowest was 3.92%. And the median was 11.39%.

Warning Sign:

Chicago Bridge & Iron Co NV gross margin has been in long term decline. The average rate of decline per year is -4.3%.


Definition

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

Chicago Bridge & Iron Co NV'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
=10679.558 - 9653.502
=1,026

Chicago Bridge & Iron Co NV's Gross Profit for the quarter that ended in Mar. 2017 is calculated as

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=1827.352 - 1676.401
=151

Chicago Bridge & Iron Co NV Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 294.526 (Jun. 2016 ) + 326.568 (Sep. 2016 ) + 117.357 (Dec. 2016 ) + 150.951 (Mar. 2017 ) = $889 Mil.

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

Chicago Bridge & Iron Co NV'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
=151 / 1827.352
=8.26 %

* 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

Chicago Bridge & Iron Co NV had a gross margin of 8.26% for the quarter that ended in Mar. 2017 => No sustainable competitive advantage


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.

Chicago Bridge & Iron Co NV Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 3572335234925706991,1991,4661,5121,026

Chicago Bridge & Iron Co NV Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 391370383378381256295327117151
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