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Luna Innovations (OTCPK:LUNA) Gross Margin % 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
Luna Innovations had a gross margin of 57.42% for the quarter that ended in Sep. 2023 => 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.
Luna Innovations Gross Margin % Related Terms
Luna Innovations Gross Margin % Historical Data
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The historical data trend for Luna Innovations'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.
LUNA vs ODYS, WRAP, SOTK: Gross Margin % Comparison
For the Scientific & Technical Instruments subindustry, Luna Innovations'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.
Luna Innovations Gross Margin % vs Hardware Industry
For the Hardware industry and Technology sector, Luna Innovations's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Luna Innovations'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.
Luna Innovations (LUNA) has a Gross Margin % of 57.42% as of Sep. 2023. Gross margin is the ratio of total gross profit to net sales. View historical data on Luna Innovations and its competitors.
Is Luna Innovations' Gross Margin % too high?
Luna Innovations' current Gross Margin % is 57.42%. The Hardware industry median Gross Margin % is 24.52. Luna Innovations' value of 57.42% is 134.2% above this industry median. Overall, Luna Innovations has a GF Score™ of 16/100, reflecting its overall financial health beyond just this single metric.
How does Luna Innovations' Gross Margin % compare to ODYS and WRAP?
Luna Innovations' Gross Margin % of 57.42% can be compared against companies in the Hardware industry. The industry median Gross Margin % is 24.52. Luna Innovations' value of 57.42% is 134.2% above this benchmark. 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 Hardware company?
The median Gross Margin % among Hardware companies is 24.52, based on 2,454 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. Luna Innovations's current Gross Margin % of 57.42% is 134.2% 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 Luna Innovations and its competitors. For the Hardware industry, the median Gross Margin % is 24.52 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Luna Innovations's current Gross Margin % is 57.42%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Luna Innovations stock overvalued right now?
Luna Innovations (LUNA) has a current Gross Margin % of 57.42%. The current Gross Margin % is 57.42% and 134.2% above the Hardware industry median of 24.52. Luna Innovations' overall GF Score™ is 16/100. 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 Luna Innovations (LUNA), the current Gross Margin % is 57.42% as of Sep. 2023. 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.
Luna Innovations Inc is engaged in optical technology, providing high-performance fiber optic test, measurement, and control products for the telecommunications, and photonics industries, and distributed fiber optic sensing solutions that measure and monitor materials and structures for applications in aerospace, automotive, oil, and gas, security, and infrastructure. Its Lightwave segment develops, manufactures, and markets optical measurements technologies like Sensing including short, medium, and long-range distributed fiber optic sensing solutions and Terahertz measurement products, and Communications test and photonic control including test equipment for communications devices and networks and specialty laser and photonic components. It derives a majority of its revenue from the U.S.
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