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GuruFocus has detected 3 Warning Signs with Nielsen Holdings PLC $NLSN.
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Nielsen Holdings PLC (NYSE:NLSN)
Gross Profit
$3,721 Mil (TTM As of Mar. 2017)

Nielsen Holdings PLC's gross profit for the three months ended in Mar. 2017 was $865 Mil. Nielsen Holdings PLC's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $3,721 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Nielsen Holdings PLC's gross profit for the three months ended in Mar. 2017 was $865 Mil. Nielsen Holdings PLC's revenue for the three months ended in Mar. 2017 was $1,526 Mil. Therefore, Nielsen Holdings PLC's Gross Margin for the quarter that ended in Mar. 2017 was 56.68%.

Nielsen Holdings PLC had a gross margin of 56.68% for the quarter that ended in Mar. 2017 => Durable competitive advantage

During the past 9 years, the highest Gross Margin of Nielsen Holdings PLC was 58.93%. The lowest was 57.20%. And the median was 58.47%.


Definition

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

Nielsen Holdings PLC'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
=6309 - 2607
=3,702

Nielsen Holdings PLC's Gross Profit for the quarter that ended in Mar. 2017 is calculated as

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=1526 - 661
=865

Nielsen Holdings PLC Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 942 (Jun. 2016 ) + 928 (Sep. 2016 ) + 986 (Dec. 2016 ) + 865 (Mar. 2017 ) = $3,721 Mil.

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

Nielsen Holdings PLC'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
=865 / 1526
=56.68 %

* 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

Nielsen Holdings PLC had a gross margin of 56.68% 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.

Nielsen Holdings PLC Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 02,7492,7852,9973,1403,1823,3053,6683,6333,702

Nielsen Holdings PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 980836911916970846942928986865
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