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GuruFocus has detected 3 Warning Signs with Group 1 Automotive Inc $GPI.
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Group 1 Automotive Inc (NYSE:GPI)
Gross Profit
$1,589 Mil (TTM As of Mar. 2017)

Group 1 Automotive Inc's gross profit for the three months ended in Mar. 2017 was $384 Mil. Group 1 Automotive Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $1,589 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Group 1 Automotive Inc's gross profit for the three months ended in Mar. 2017 was $384 Mil. Group 1 Automotive Inc's revenue for the three months ended in Mar. 2017 was $2,519 Mil. Therefore, Group 1 Automotive Inc's Gross Margin for the quarter that ended in Mar. 2017 was 15.23%.

Group 1 Automotive Inc had a gross margin of 15.23% for the quarter that ended in Mar. 2017 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Group 1 Automotive Inc was 17.14%. The lowest was 14.43%. And the median was 15.27%.

Warning Sign:

Group 1 Automotive Inc gross margin has been in long term decline. The average rate of decline per year is -1.4%.


Definition

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

Group 1 Automotive 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
=10887.612 - 9292.543
=1,595

Group 1 Automotive 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
=2518.829 - 2135.307
=384

Group 1 Automotive Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 410.119 (Jun. 2016 ) + 406.668 (Sep. 2016 ) + 389.181 (Dec. 2016 ) + 383.522 (Mar. 2017 ) = $1,589 Mil.

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

Group 1 Automotive 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
=384 / 2518.829
=15.23 %

* 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

Group 1 Automotive Inc had a gross margin of 15.23% 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.

Group 1 Automotive Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 9969167768779611,1171,2931,4481,5341,595

Group 1 Automotive Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 366364392398380389410407389384
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