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GuruFocus has detected 6 Warning Signs with Marvell Technology Group Ltd $MRVL.
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Marvell Technology Group Ltd (NAS:MRVL)
Gross Profit
$1,355 Mil (TTM As of Apr. 2017)

Marvell Technology Group Ltd's gross profit for the three months ended in Apr. 2017 was $349 Mil. Marvell Technology Group Ltd's gross profit for the trailing twelve months (TTM) ended in Apr. 2017 was $1,355 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Marvell Technology Group Ltd's gross profit for the three months ended in Apr. 2017 was $349 Mil. Marvell Technology Group Ltd's revenue for the three months ended in Apr. 2017 was $579 Mil. Therefore, Marvell Technology Group Ltd's Gross Margin for the quarter that ended in Apr. 2017 was 60.19%.

Marvell Technology Group Ltd had a gross margin of 60.19% for the quarter that ended in Apr. 2017 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Marvell Technology Group Ltd was 59.21%. The lowest was 45.55%. And the median was 52.26%.

Warning Sign:

Marvell Technology Group Ltd gross margin has been in long term decline. The average rate of decline per year is -1.6%.


Definition

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

Marvell Technology Group Ltd's Gross Profit for the fiscal year that ended in Jan. 2017 is calculated as

Gross Profit (A: Jan. 2017 )=Revenue - Cost of Goods Sold
=2317.674 - 1029.527
=1,288

Marvell Technology Group Ltd's Gross Profit for the quarter that ended in Apr. 2017 is calculated as

Gross Profit (Q: Apr. 2017 )=Revenue - Cost of Goods Sold
=579.18 - 230.549
=349

Marvell Technology Group Ltd Gross Profit for the trailing twelve months (TTM) ended in Apr. 2017 was 338.796 (Jul. 2016 ) + 368.359 (Oct. 2016 ) + 299.38 (Jan. 2017 ) + 348.631 (Apr. 2017 ) = $1,355 Mil.

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

Marvell Technology Group Ltd's Gross Margin for the quarter that ended in Apr. 2017 is calculated as

Gross Margin (Q: Apr. 2017 )=Gross Profit (Q: Apr. 2017 ) / Revenue (Q: Apr. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=349 / 579.18
=60.19 %

* 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

Marvell Technology Group Ltd had a gross margin of 60.19% for the quarter that ended in Apr. 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.

Marvell Technology Group Ltd Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
Gross_Profit 1,3971,5241,5812,1391,9271,6751,7411,8381,2071,288

Marvell Technology Group Ltd Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
Gross_Profit 415373249296289275339368299349
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