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National Grid PLC  (NYSE:NGG) Gross Margin %: 18.11% (As of Mar. 2017)

Gross Margin % is calculated as gross profit divided by its revenue. National Grid PLC's Gross Profit for the six months ended in Mar. 2017 was $1,751 Mil. National Grid PLC's Revenue for the six months ended in Mar. 2017 was $9,669 Mil. Therefore, National Grid PLC's Gross Margin % for the quarter that ended in Mar. 2017 was 18.11%.

Warning Sign:

National Grid PLC gross margin has been in long term decline. The average rate of decline per year is -3.5%.


NYSE:NGG' s Gross Margin % Range Over the Past 10 Years
Min: 21.34   Max: 44.03
Current: 21.34

21.34
44.03

During the past 13 years, the highest Gross Margin % of National Grid PLC was 44.03%. The lowest was 21.34%. And the median was 25.39%.

NYSE:NGG's Gross Margin % is ranked lower than
71% of the 605 Companies
in the Global industry.

( Industry Median: 35.46 vs. NYSE:NGG: 21.34 )

National Grid PLC had a gross margin of 18.11% for the quarter that ended in Mar. 2017 => No sustainable competitive advantage

The 5-Year average Growth Rate of Gross Margin for National Grid PLC was -3.50% 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.

National Grid PLC 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 26.11 25.22 22.09 24.41 21.34

National Grid PLC Semi-Annual Data

Sep07 Mar08 Sep08 Mar09 Sep09 Mar10 Sep10 Mar11 Sep11 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 Mar17
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 18.80 26.98 21.64 24.85 18.11

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.

National Grid PLC'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 )
=3960.5 / 18561.7283951
=(Revenue - Cost of Goods Sold) / Revenue
=(18561.7283951 - 14601.2345679) / 18561.7283951
=21.34 %

National Grid PLC's Gross Margin for the quarter that ended in Mar. 2017 is calculated as


Gross Margin % (Q: Mar. 2017 )=Gross Profit (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 )
=-7918.5 / 9669.13580247
=(Revenue - Cost of Goods Sold) / Revenue
=(9669.13580247 - 7918.51851852) / 9669.13580247
=18.11 %

* 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

National Grid PLC had a gross margin of 18.11% for the quarter that ended in Mar. 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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