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GuruFocus has detected 3 Warning Signs with Helmerich & Payne Inc $HP.
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Helmerich & Payne Inc (NYSE:HP)
Gross Profit
$527 Mil (TTM As of Mar. 2017)

Helmerich & Payne Inc's gross profit for the three months ended in Mar. 2017 was $108 Mil. Helmerich & Payne Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $527 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Helmerich & Payne Inc's gross profit for the three months ended in Mar. 2017 was $108 Mil. Helmerich & Payne Inc's revenue for the three months ended in Mar. 2017 was $405 Mil. Therefore, Helmerich & Payne Inc's Gross Margin for the quarter that ended in Mar. 2017 was 26.76%.

Helmerich & Payne Inc had a gross margin of 26.76% for the quarter that ended in Mar. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Helmerich & Payne Inc was 48.76%. The lowest was 42.83%. And the median was 45.66%.


Definition

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

Helmerich & Payne Inc's Gross Profit for the fiscal year that ended in Sep. 2016 is calculated as

Gross Profit (A: Sep. 2016 )=Revenue - Cost of Goods Sold
=1624.232 - 898.805
=725

Helmerich & Payne 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
=405.283 - 296.829
=108

Helmerich & Payne Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 180.34 (Jun. 2016 ) + 117.304 (Sep. 2016 ) + 120.911 (Dec. 2016 ) + 108.454 (Mar. 2017 ) = $527 Mil.

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

Helmerich & Payne 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
=108 / 405.283
=26.76 %

* 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

Helmerich & Payne Inc had a gross margin of 26.76% for the quarter that ended in Mar. 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.

Helmerich & Payne Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
Gross_Profit 7679508998031,1111,4011,5351,7091,458725

Helmerich & Payne Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 501419311228211217180117121108
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