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HCP Inc  (NYSE:HCP) Gross Profit: $1,282 Mil (TTM As of Sep. 2017)

HCP Inc's gross profit for the three months ended in Sep. 2017 was $299 Mil. HCP Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2017 was $1,282 Mil.

Gross Margin % is calculated as gross profit divided by its revenue. HCP Inc's gross profit for the three months ended in Sep. 2017 was $299 Mil. HCP Inc's Revenue for the three months ended in Sep. 2017 was $454 Mil. Therefore, HCP Inc's Gross Margin % for the quarter that ended in Sep. 2017 was 65.79%.

HCP Inc had a gross margin of 65.79% for the quarter that ended in Sep. 2017 => Durable competitive advantage

During the past 13 years, the highest Gross Margin % of HCP Inc was 87.09%. The lowest was 65.32%. And the median was 83.15%.

Warning Sign:

HCP Inc gross margin has been in long term decline. The average rate of decline per year is -6.1%.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

HCP Inc Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1,599.25 1,801.60 1,255.54 1,329.81 1,390.90

HCP Inc Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 342.84 344.30 333.09 305.77 298.69

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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

HCP 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
=2129.294 - 738.399
=1,391

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

Gross Profit (Q: Sep. 2017 )=Revenue - Cost of Goods Sold
=454.023 - 155.338
=299

Gross Profit for the trailing twelve months (TTM) ended in Sep. 2017 was 344.297 (Dec. 2016 ) + 333.087 (Mar. 2017 ) + 305.765 (Jun. 2017 ) + 298.685 (Sep. 2017 ) = $1,282 Mil.

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

HCP Inc's Gross Margin % for the quarter that ended in Sep. 2017 is calculated as

Gross Margin % (Q: Sep. 2017 )=Gross Profit (Q: Sep. 2017 ) / Revenue (Q: Sep. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=299 / 454.023
=65.79 %

* 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

HCP Inc had a gross margin of 65.79% for the quarter that ended in Sep. 2017 => Durable competitive advantage


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