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Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
Whole Earth Brands Operating Margin % Related Terms
Whole Earth Brands Operating Margin % Historical Data
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The historical data trend for Whole Earth Brands's Operating 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.
FREEW vs MAMA, LWAY, FTLF: Operating Margin % Comparison
For the Packaged Foods subindustry, Whole Earth Brands's Operating Margin %, along with its competitors' market caps and Operating 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.
Whole Earth Brands Operating Margin % vs Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, Whole Earth Brands's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Whole Earth Brands's Operating Margin % falls into.
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
Whole Earth Brands's Operating Margin % for the fiscal year that ended in Dec. 2023 is calculated as
* 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.
Whole Earth Brands (FREEW) has a Operating Margin % of 7.20% as of Jun. 2024. Operating margin is the ratio of total operating income to net sales. View historical data on Whole Earth Brands and its competitors. This is 30% above median its historical median of 5.53. Over the past decade, Whole Earth Brands' Operating Margin % has ranged from 4.06 to 12.79.
Is Whole Earth Brands' Operating Margin % too high?
Whole Earth Brands' current Operating Margin % of 7.20% is 30% above median its 10-year median of 5.53. Over the past 10 years, this metric has ranged from a low of 4.06 to a high of 12.79. The Consumer Packaged Goods industry median Operating Margin % is 5.33. Whole Earth Brands' value of 7.20% is 35.1% above this industry median. Overall, Whole Earth Brands has a GF Score™ of 12/100, reflecting its overall financial health beyond just this single metric.
How does Whole Earth Brands' Operating Margin % compare to MAMA and LWAY?
Whole Earth Brands' Operating Margin % of 7.20% can be compared against companies in the Consumer Packaged Goods industry. The industry median Operating Margin % is 5.33. Whole Earth Brands' value of 7.20% is 35.1% above this benchmark. Historically, Whole Earth Brands' own Operating Margin % has ranged from 4.06 to 12.79 over the past decade. While the company's 10-year median is 5.53 vs. the industry median of 5.33, Whole Earth Brands has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Operating Margin % for a Consumer Packaged Goods company?
The median Operating Margin % among Consumer Packaged Goods companies is 5.33, based on 1,966 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Whole Earth Brands's current Operating Margin % of 7.20% is 35.1% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on Whole Earth Brands and its competitors. For the Consumer Packaged Goods industry, the median Operating Margin % is 5.33 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Whole Earth Brands's current Operating Margin % is 7.20%, which is 30% above median its own 10-year median of 5.53. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Whole Earth Brands stock overvalued right now?
Whole Earth Brands (FREEW) has a current Operating Margin % of 7.20%. The current Operating Margin % is 7.20%, which is 30% above median its 10-year median of 5.53 and 35.1% above the Consumer Packaged Goods industry median of 5.33. Whole Earth Brands' overall GF Score™ is 12/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For Whole Earth Brands (FREEW), the current Operating Margin % is 7.20% as of Jun. 2024. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Whole Earth Brands Inc is a food company that provides access to high-quality, plant-based sweeteners, flavor enhancers and other foods through diverse portfolio of brands and products. The company operates in two segments namely, Branded CPG and Flavors & Ingredients. Its portfolio consists of three main product groups: sweeteners, adjacencies, and ingredients. Majority of the revenue is generated from the Branded CPG segment which provides a variety of sweetener formulations under brands such as Whole Earth, Pure Via, Wholesome, Swerve, Canderel, and Equal. Geographically, the company derives key revenue from North America and rest from Europe, Latin America, India, Middle East and Africa and other markets.
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