Switch to:
GuruFocus has detected 5 Warning Signs with ABB Ltd $ABB.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
ABB Ltd (NYSE:ABB)
Gross Profit
$9,946 Mil (TTM As of Jun. 2017)

ABB Ltd's gross profit for the three months ended in Jun. 2017 was $2,599 Mil. ABB Ltd's gross profit for the trailing twelve months (TTM) ended in Jun. 2017 was $9,946 Mil.

Gross Margin is calculated as gross profit divided by its revenue. ABB Ltd's gross profit for the three months ended in Jun. 2017 was $2,599 Mil. ABB Ltd's revenue for the three months ended in Jun. 2017 was $8,454 Mil. Therefore, ABB Ltd's Gross Margin for the quarter that ended in Jun. 2017 was 30.74%.

ABB Ltd had a gross margin of 30.74% for the quarter that ended in Jun. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of ABB Ltd was 31.34%. The lowest was 28.16%. And the median was 29.13%.


Definition

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

ABB Ltd'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
=33828 - 24081
=9,747

ABB Ltd's Gross Profit for the quarter that ended in Jun. 2017 is calculated as

Gross Profit (Q: Jun. 2017 )=Revenue - Cost of Goods Sold
=8454 - 5855
=2,599

ABB Ltd Gross Profit for the trailing twelve months (TTM) ended in Jun. 2017 was 2459 (Sep. 2016 ) + 2515 (Dec. 2016 ) + 2373 (Mar. 2017 ) + 2599 (Jun. 2017 ) = $9,946 Mil.

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

ABB Ltd's Gross Margin for the quarter that ended in Jun. 2017 is calculated as

Gross Margin (Q: Jun. 2017 )=Gross Profit (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,599 / 8454
=30.74 %

* 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

ABB Ltd had a gross margin of 30.74% for the quarter that ended in Jun. 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.

ABB Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 8,96810,9409,3259,52911,43411,37811,99211,21510,1349,747

ABB Ltd Quarterly Data

Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17Jun17
Gross_Profit 2,5012,7202,5182,3952,3582,4152,4592,5152,3732,599
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK