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GuruFocus has detected 4 Warning Signs with KLA-Tencor Corp $KLAC.
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KLA-Tencor Corp (NAS:KLAC)
Gross Profit
$2,183 Mil (TTM As of Mar. 2017)

KLA-Tencor Corp's gross profit for the three months ended in Mar. 2017 was $571 Mil. KLA-Tencor Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $2,183 Mil.

Gross Margin is calculated as gross profit divided by its revenue. KLA-Tencor Corp's gross profit for the three months ended in Mar. 2017 was $571 Mil. KLA-Tencor Corp's revenue for the three months ended in Mar. 2017 was $914 Mil. Therefore, KLA-Tencor Corp's Gross Margin for the quarter that ended in Mar. 2017 was 62.43%.

KLA-Tencor Corp had a gross margin of 62.43% for the quarter that ended in Mar. 2017 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of KLA-Tencor Corp was 63.09%. The lowest was 43.11%. And the median was 56.65%.


Definition

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

KLA-Tencor Corp's Gross Profit for the fiscal year that ended in Jun. 2016 is calculated as

Gross Profit (A: Jun. 2016 )=Revenue - Cost of Goods Sold
=2984.493 - 1163.391
=1,821

KLA-Tencor Corp's Gross Profit for the quarter that ended in Mar. 2017 is calculated as

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=913.809 - 343.274
=571

KLA-Tencor Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 581.603 (Jun. 2016 ) + 472.837 (Sep. 2016 ) + 558.378 (Dec. 2016 ) + 570.535 (Mar. 2017 ) = $2,183 Mil.

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

KLA-Tencor Corp'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
=571 / 913.809
=62.43 %

* 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

KLA-Tencor Corp had a gross margin of 62.43% 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.

KLA-Tencor Corp Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
Gross_Profit 1,5411,3766551,0051,9161,8421,6051,6961,5991,821

KLA-Tencor Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 393418433372429438582473558571
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