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GuruFocus has detected 2 Warning Signs with Equifax Inc $EFX.
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Equifax Inc (NYSE:EFX)
Gross Profit
$2,088 Mil (TTM As of Mar. 2017)

Equifax Inc's gross profit for the three months ended in Mar. 2017 was $531 Mil. Equifax Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $2,088 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Equifax Inc's gross profit for the three months ended in Mar. 2017 was $531 Mil. Equifax Inc's revenue for the three months ended in Mar. 2017 was $832 Mil. Therefore, Equifax Inc's Gross Margin for the quarter that ended in Mar. 2017 was 63.85%.

Equifax Inc had a gross margin of 63.85% for the quarter that ended in Mar. 2017 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Equifax Inc was 66.68%. The lowest was 58.11%. And the median was 63.09%.


Definition

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

Equifax 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
=3144.9 - 1113.4
=2,032

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

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=832.2 - 300.8
=531

Equifax Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 525.5 (Jun. 2016 ) + 516.1 (Sep. 2016 ) + 514.8 (Dec. 2016 ) + 531.4 (Mar. 2017 ) = $2,088 Mil.

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

Equifax Inc'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
=531 / 832.2
=63.85 %

* 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

Equifax Inc had a gross margin of 63.85% for the quarter that ended in Mar. 2017 => Durable 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.

Equifax Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 1,0911,1449971,1001,1891,3141,5171,5921,7762,032

Equifax Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 410437457441441475526516515531
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