Market Cap : 4.06 B | Enterprise Value : 4.15 B | PE Ratio : 18.58 | PB Ratio : 0.84 |
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Gross Margin % is calculated as gross profit divided by its revenue. 1&1 Drillisch AG's Gross Profit for the three months ended in Dec. 2020 was €120 Mil. 1&1 Drillisch AG's Revenue for the three months ended in Dec. 2020 was €973 Mil. Therefore, 1&1 Drillisch AG's Gross Margin % for the quarter that ended in Dec. 2020 was 12.36%.
Warning Sign:
1&1 Drillisch AG gross margin has been in long term decline. The average rate of decline per year is -7.6%.
During the past 13 years, the highest Gross Margin % of 1&1 Drillisch AG was 49.85%. The lowest was 23.90%. And the median was 31.67%.
1&1 Drillisch AG had a gross margin of 12.36% for the quarter that ended in Dec. 2020 => No sustainable competitive advantage
The 5-Year average Growth Rate of Gross Margin for 1&1 Drillisch AG was -7.60% per year.
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.
* The bar in red indicates where 1&1 Drillisch AG's Gross Margin % falls into.
Gross Margin is the percentage of Gross Profit out of sales or Revenue.
1&1 Drillisch AG's Gross Margin for the fiscal year that ended in Dec. 2020 is calculated as
Gross Margin % (A: Dec. 2020 ) | = | Gross Profit (A: Dec. 2020 ) | / | Revenue (A: Dec. 2020 ) |
= | 905 | / | 3786.788 | |
= | (Revenue - Cost of Goods Sold) | / | Revenue | |
= | (3786.788 - 2881.797) | / | 3786.788 | |
= | 23.90 % |
1&1 Drillisch AG's Gross Margin for the quarter that ended in Dec. 2020 is calculated as
Gross Margin % (Q: Dec. 2020 ) | = | Gross Profit (Q: Dec. 2020 ) | / | Revenue (Q: Dec. 2020 ) |
= | 120.3 | / | 973.041 | |
= | (Revenue - Cost of Goods Sold) | / | Revenue | |
= | (973.041 - 852.762) | / | 973.041 | |
= | 12.36 % |
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange 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.
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
1&1 Drillisch AG had a gross margin of 12.36% for the quarter that ended in Dec. 2020 => No sustainable competitive advantage
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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