Gross Margin % is calculated as gross profit divided by its revenue. Trex Co's Gross Profit for the
three
months ended in Dec. 2023 was $71 Mil. Trex Co's Revenue for the
three
months ended in Dec. 2023 was $196 Mil. Therefore, Trex Co's Gross Margin % for the quarter that ended in Dec. 2023 was 36.09%.
Warning Sign:
Trex Co Inc gross margin has been in long-term decline. The average rate of decline per year is -1.8%.
The historical rank and industry rank for Trex Co's Gross Margin % or its related term are showing as below:
TREX'
s Gross Margin % Range Over the Past 10 Years
Min: 35.13 Med: 39.91 Max: 43.1
Current: 41.32
During the past 13 years, the highestGross Margin % of Trex Co was 43.10%. The lowest was 35.13%. And the median was 39.91%.
TREX's Gross Margin % is ranked better than 85.46% of 1609
companies
in the Construction industry
Industry Median: 19.11
vs TREX: 41.32
Trex Co had a gross margin of 36.09% for the quarter that ended in Dec. 2023 => Competition eroding margins
The 5-Year average Growth Rate of Gross Margin for Trex Co was -1.80% per year.
Trex Co Gross Margin % Historical Data
The historical data trend for Trex Co's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Trex Co's Gross Margin %
For the Building Products & Equipment subindustry, Trex Co's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* 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. Note that "N/A" values will not show up in the chart.
Trex Co's Gross Margin % Distribution in the Construction Industry
For the Construction industry and Industrials sector, Trex Co's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Trex Co's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount 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.
Trex Co (NYSE:TREX) Gross Margin % 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
Trex Co had a gross margin of 36.09% for the quarter that ended in Dec. 2023 => 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.
Trex Co Gross Margin % Related Terms
Thank you for viewing the detailed overview of Trex Co's Gross Margin % provided by GuruFocus.com. Please click on the following links to see related term pages.
Trex Co Inc is a manufacturer of wooden alternative-decking products. The company offers outdoor products in the decking, railing, porch, fencing, trim, steel deck framing, and outdoor lighting categories. Its products are sold under the Trex brand and manufactured in the United States. Further, the company licenses its Trex brand to third parties to manufacture and sell products under the Trex trademark. The distribution is focused on wholesale distributors and retail lumber dealers, which in turn sell Trex products to homeowners and contractors, with an emphasis on professional contractors, remodelers, and homebuilders. The company operates in two reportable segments Trex Residential and Trex Commercial. The majority of revenue is derived from the Trex Residential segment.
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