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Diamond Foods Inc  (NAS:DMND) Gross Margin %: 27.08% (As of Oct. 2015)

Gross Margin % is calculated as gross profit divided by its revenue. Diamond Foods Inc's Gross Profit for the three months ended in Oct. 2015 was $60.9 Mil. Diamond Foods Inc's Revenue for the three months ended in Oct. 2015 was $224.8 Mil. Therefore, Diamond Foods Inc's Gross Margin % for the quarter that ended in Oct. 2015 was 27.08%.




Diamond Foods Inc had a gross margin of 27.08% for the quarter that ended in Oct. 2015 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Diamond Foods Inc was 0.00% 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.

Diamond Foods Inc Annual Data

Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Jul15
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 22.39 18.31 23.79 24.07 26.38

Diamond Foods Inc Quarterly Data

Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15
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 24.08 26.63 28.46 27.00 27.08

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.

Diamond Foods Inc's Gross Margin for the fiscal year that ended in Jul. 2015 is calculated as

Gross Margin % (A: Jul. 2015 )=Gross Profit (A: Jul. 2015 ) / Revenue (A: Jul. 2015 )
=228 / 864.165
=(Revenue - Cost of Goods Sold) / Revenue
=(864.165 - 636.171) / 864.165
=26.38 %

Diamond Foods Inc's Gross Margin for the quarter that ended in Oct. 2015 is calculated as


Gross Margin % (Q: Oct. 2015 )=Gross Profit (Q: Oct. 2015 ) / Revenue (Q: Oct. 2015 )
=-164 / 224.849
=(Revenue - Cost of Goods Sold) / Revenue
=(224.849 - 163.97) / 224.849
=27.08 %

* 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

Diamond Foods Inc had a gross margin of 27.08% for the quarter that ended in Oct. 2015 => Competition eroding margins


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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