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Honda Motor Co Ltd  (NYSE:HMC) Gross Margin %: 20.85% (As of Sep. 2017)

Gross Margin % is calculated as gross profit divided by its revenue. Honda Motor Co Ltd's Gross Profit for the three months ended in Sep. 2017 was $7,108 Mil. Honda Motor Co Ltd's Revenue for the three months ended in Sep. 2017 was $34,089 Mil. Therefore, Honda Motor Co Ltd's Gross Margin % for the quarter that ended in Sep. 2017 was 20.85%.

Warning Sign:

Honda Motor Co Ltd gross margin has been in long term decline. The average rate of decline per year is -3.1%.


NYSE:HMC' s Gross Margin % Range Over the Past 10 Years
Min: 21.86   Max: 28.82
Current: 21.86

21.86
28.82

During the past 13 years, the highest Gross Margin % of Honda Motor Co Ltd was 28.82%. The lowest was 21.86%. And the median was 25.38%.

NYSE:HMC's Gross Margin % is ranked higher than
54% of the 1276 Companies
in the Global industry.

( Industry Median: 21.14 vs. NYSE:HMC: 21.86 )

Honda Motor Co Ltd had a gross margin of 20.85% for the quarter that ended in Sep. 2017 => Competition eroding margins

The 5-Year average Growth Rate of Gross Margin for Honda Motor Co Ltd was -3.10% 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.

Honda Motor Co Ltd Annual Data

Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Mar17
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 25.64 23.31 22.49 22.39 22.38

Honda Motor Co Ltd Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
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 22.68 21.83 22.18 22.58 20.85

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.

Honda Motor Co Ltd's Gross Margin for the fiscal year that ended in Mar. 2017 is calculated as

Gross Margin % (A: Mar. 2017 )=Gross Profit (A: Mar. 2017 ) / Revenue (A: Mar. 2017 )
=27749.3 / 123978.337975
=(Revenue - Cost of Goods Sold) / Revenue
=(123978.337975 - 96229.0542126) / 123978.337975
=22.38 %

Honda Motor Co Ltd's Gross Margin for the quarter that ended in Sep. 2017 is calculated as


Gross Margin % (Q: Sep. 2017 )=Gross Profit (Q: Sep. 2017 ) / Revenue (Q: Sep. 2017 )
=-26981.1 / 34088.6022243
=(Revenue - Cost of Goods Sold) / Revenue
=(34088.6022243 - 26981.0608796) / 34088.6022243
=20.85 %

* 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

Honda Motor Co Ltd had a gross margin of 20.85% for the quarter that ended in Sep. 2017 => 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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