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Luby's Inc  (NYSE:LUB) Gross Margin %: 14.51% (As of May. 2017)

Gross Margin % is calculated as gross profit divided by its revenue. Luby's Inc's Gross Profit for the three months ended in May. 2017 was $12.9 Mil. Luby's Inc's Revenue for the three months ended in May. 2017 was $88.7 Mil. Therefore, Luby's Inc's Gross Margin % for the quarter that ended in May. 2017 was 14.51%.

Warning Sign:

Luby's Inc gross margin has been in long term decline. The average rate of decline per year is -12.8%.


NYSE:LUB' s Gross Margin % Range Over the Past 10 Years
Min: 12.8   Max: 72.67
Current: 13.85

12.8
72.67

During the past 13 years, the highest Gross Margin % of Luby's Inc was 72.67%. The lowest was 12.80%. And the median was 14.96%.

NYSE:LUB's Gross Margin % is ranked lower than
88% of the 313 Companies
in the Global industry.

( Industry Median: 55.44 vs. NYSE:LUB: 13.85 )

Luby's Inc had a gross margin of 14.51% for the quarter that ended in May. 2017 => No sustainable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Luby's Inc was -12.80% 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.

Luby's Inc Annual Data

Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 16.67 15.51 14.56 14.19 15.34

Luby's Inc Quarterly Data

Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Dec15 Feb16 May16 Aug16 Dec16 Feb17 May17
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 15.63 15.05 12.42 13.70 14.51

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.

Luby's Inc's Gross Margin for the fiscal year that ended in Aug. 2016 is calculated as

Gross Margin % (A: Aug. 2016 )=Gross Profit (A: Aug. 2016 ) / Revenue (A: Aug. 2016 )
=61.7 / 402.639
=(Revenue - Cost of Goods Sold) / Revenue
=(402.639 - 340.894) / 402.639
=15.34 %

Luby's Inc's Gross Margin for the quarter that ended in May. 2017 is calculated as


Gross Margin % (Q: May. 2017 )=Gross Profit (Q: May. 2017 ) / Revenue (Q: May. 2017 )
=-75.8 / 88.719
=(Revenue - Cost of Goods Sold) / Revenue
=(88.719 - 75.849) / 88.719
=14.51 %

* 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

Luby's Inc had a gross margin of 14.51% for the quarter that ended in May. 2017 => No sustainable 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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