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Medtronic PLC  (NYSE:MDT) Gross Margin %: 68.21% (As of Jul. 2017)

Gross Margin % is calculated as gross profit divided by its revenue. Medtronic PLC's Gross Profit for the three months ended in Jul. 2017 was $5,041 Mil. Medtronic PLC's Revenue for the three months ended in Jul. 2017 was $7,390 Mil. Therefore, Medtronic PLC's Gross Margin % for the quarter that ended in Jul. 2017 was 68.21%.

Warning Sign:

Medtronic PLC gross margin has been in long term decline. The average rate of decline per year is -2.4%.


NYSE:MDT' s Gross Margin % Range Over the Past 10 Years
Min: 68.29   Max: 76.14
Current: 68.67

68.29
76.14

During the past 13 years, the highest Gross Margin % of Medtronic PLC was 76.14%. The lowest was 68.29%. And the median was 74.83%.

NYSE:MDT's Gross Margin % is ranked higher than
75% of the 303 Companies
in the Global industry.

( Industry Median: 50.88 vs. NYSE:MDT: 68.67 )

Medtronic PLC had a gross margin of 68.21% for the quarter that ended in Jul. 2017 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Medtronic PLC was -2.40% 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.

Medtronic PLC Annual Data

Apr08 Apr09 Apr10 Apr11 Apr12 Apr13 Apr14 Apr15 Apr16 Apr17
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 75.13 74.52 68.86 68.29 68.73

Medtronic PLC Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
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 68.45 68.33 68.86 69.23 68.21

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.

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

Gross Margin % (A: Apr. 2017 )=Gross Profit (A: Apr. 2017 ) / Revenue (A: Apr. 2017 )
=20419 / 29710
=(Revenue - Cost of Goods Sold) / Revenue
=(29710 - 9291) / 29710
=68.73 %

Medtronic PLC's Gross Margin for the quarter that ended in Jul. 2017 is calculated as


Gross Margin % (Q: Jul. 2017 )=Gross Profit (Q: Jul. 2017 ) / Revenue (Q: Jul. 2017 )
=-2349 / 7390
=(Revenue - Cost of Goods Sold) / Revenue
=(7390 - 2349) / 7390
=68.21 %

* 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

Medtronic PLC had a gross margin of 68.21% for the quarter that ended in Jul. 2017 => 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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