Allocate SoftwareLSE:ALLA Gross Margin % is 75.54% as of May. 2014, which is 131% above its 10-year median of 32.64. The stock has 1 warning sign investors should review.
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
Allocate Software had a gross margin of 75.54% for the quarter that ended in May. 2014 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Allocate Software Gross Margin % Related Terms
Allocate Software Gross Margin % Historical Data
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The historical data trend for Allocate Software's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Software - Application subindustry, Allocate Software's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* 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. Note that "N/A" values will not show up in the chart.
Allocate Software Gross Margin % vs Software Industry
For the Software industry and Technology sector, Allocate Software's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Allocate Software's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange 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.
Allocate Software (LSE:ALLA) has a Gross Margin % of 75.54% as of May. 2014. Gross margin is the ratio of total gross profit to net sales. View historical data on Allocate Software and its competitors. This is 131% above median its historical median of 32.64.
Is Allocate Software's Gross Margin % too high?
Allocate Software's current Gross Margin % of 75.54% is 131% above median its 10-year median of 32.64. The Software industry median Gross Margin % is 40.45. Allocate Software's value of 75.54% is 86.8% above this industry median.
How does Allocate Software's Gross Margin % compare to SREV and ASUR?
Allocate Software's Gross Margin % of 75.54% can be compared against companies in the Software industry. The industry median Gross Margin % is 40.45. Allocate Software's value of 75.54% is 86.8% above this benchmark. While the company's 10-year median is 32.64 vs. the industry median of 40.45, Allocate Software has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.45, based on 2,680 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Allocate Software's current Gross Margin % of 75.54% is 86.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Allocate Software and its competitors. For the Software industry, the median Gross Margin % is 40.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Allocate Software's current Gross Margin % is 75.54%, which is 131% above median its own 10-year median of 32.64. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Allocate Software stock overvalued right now?
Allocate Software (LSE:ALLA) has a current Gross Margin % of 75.54%. The current Gross Margin % is 75.54%, which is 131% above median its 10-year median of 32.64 and 86.8% above the Software industry median of 40.45. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Allocate Software (LSE:ALLA), the current Gross Margin % is 75.54% as of May. 2014. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Allocate Software PLC is engaged in the development, sale and support of workforce management solutions, and the provision of related IT services to major healthcare, defence, government and commercial customers. The business of the company is focused principally on the Healthcare market in addition to Defence. Its segments are Licence, Subscriptions, Support, and Services. Licence and Subscriptions segments represent the sale of non-cancellable software licence agreements and subscriptions associated with that software. Support and Services segments represent the provision of installation, consulting, training and product support. It operates in UK, Europe, USA and Australia.
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