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Diageo PLC  (NYSE:DEO) Gross Margin %: 61.61% (As of Dec. 2016)

Gross Margin % is calculated as gross profit divided by its revenue. Diageo PLC's Gross Profit for the six months ended in Dec. 2016 was $4,939 Mil. Diageo PLC's Revenue for the six months ended in Dec. 2016 was $8,016 Mil. Therefore, Diageo PLC's Gross Margin % for the quarter that ended in Dec. 2016 was 61.61%.


NYSE:DEO' s Gross Margin % Range Over the Past 10 Years
Min: 57.37   Max: 61.16
Current: 61.16

57.37
61.16

During the past 13 years, the highest Gross Margin % of Diageo PLC was 61.16%. The lowest was 57.37%. And the median was 59.77%.

NYSE:DEO's Gross Margin % is ranked higher than
80% of the 206 Companies
in the Global industry.

( Industry Median: 42.22 vs. NYSE:DEO: 61.16 )

Diageo PLC had a gross margin of 61.61% for the quarter that ended in Dec. 2016 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Diageo PLC was -0.20% per year.


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.

Diageo PLC Annual Data

Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 60.93 60.72 57.37 59.46 61.16

Diageo PLC Semi-Annual Data

Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17
Gross Margin % 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 55.59 59.12 59.85 61.61 60.65

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 Margin is the percentage of Gross Profit out of sales or Revenue.

Diageo PLC's Gross Margin for the fiscal year that ended in Jun. 2017 is calculated as

Gross Margin % (A: Jun. 2017 )=Gross Profit (A: Jun. 2017 ) / Revenue (A: Jun. 2017 )
=9436.6 / 15428.9372599
=(Revenue - Cost of Goods Sold) / Revenue
=(15428.9372599 - 5992.31754161) / 15428.9372599
=61.16 %

Diageo PLC's Gross Margin for the quarter that ended in Dec. 2016 is calculated as


Gross Margin % (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=-3077.4 / 8016.22971286
=(Revenue - Cost of Goods Sold) / Revenue
=(8016.22971286 - 3077.40324594) / 8016.22971286
=61.61 %

* 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

Diageo PLC had a gross margin of 61.61% for the quarter that ended in Dec. 2016 => 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.


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