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Richardson Electronics Ltd  (NAS:RELL) Gross Profit: $43.9 Mil (TTM As of May. 2017)

Richardson Electronics Ltd's gross profit for the three months ended in May. 2017 was $12.0 Mil. Richardson Electronics Ltd's gross profit for the trailing twelve months (TTM) ended in May. 2017 was $43.9 Mil.

Gross Margin % is calculated as gross profit divided by its revenue. Richardson Electronics Ltd's gross profit for the three months ended in May. 2017 was $12.0 Mil. Richardson Electronics Ltd's Revenue for the three months ended in May. 2017 was $37.4 Mil. Therefore, Richardson Electronics Ltd's Gross Margin % for the quarter that ended in May. 2017 was 32.09%.

Richardson Electronics Ltd had a gross margin of 32.09% for the quarter that ended in May. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin % of Richardson Electronics Ltd was 32.06%. The lowest was 22.09%. And the median was 29.69%.


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.

Richardson Electronics Ltd Annual Data

May08 May09 May10 May11 May12 May13 May14 May15 May16 May17
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 41.55 41.01 41.14 44.84 43.88

Richardson Electronics Ltd Quarterly Data

Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17
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 13.39 10.24 10.96 10.69 11.99

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.

Richardson Electronics Ltd's Gross Profit for the fiscal year that ended in May. 2017 is calculated as

Gross Profit (A: May. 2017 )=Revenue - Cost of Goods Sold
=136.872 - 92.989
=43.9

Richardson Electronics Ltd's Gross Profit for the quarter that ended in May. 2017 is calculated as

Gross Profit (Q: May. 2017 )=Revenue - Cost of Goods Sold
=37.359 - 25.372
=12.0

Gross Profit for the trailing twelve months (TTM) ended in May. 2017 was 10.24 (Aug. 2016 ) + 10.964 (Nov. 2016 ) + 10.692 (Feb. 2017 ) + 11.987 (May. 2017 ) = $43.9 Mil.

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

Richardson Electronics Ltd's Gross Margin % for the quarter that ended in May. 2017 is calculated as

Gross Margin % (Q: May. 2017 )=Gross Profit (Q: May. 2017 ) / Revenue (Q: May. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=12.0 / 37.359
=32.09 %

* 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

Richardson Electronics Ltd had a gross margin of 32.09% for the quarter that ended in May. 2017 => Competition eroding margins


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