Allocate SoftwareLSE:ALLA Operating Margin % is 21.14% as of May. 2014, which is 280% above its 10-year median of 5.57. The stock has 1 warning sign investors should review.
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.
Allocate Software Operating Margin % Related Terms
Allocate Software Operating Margin % Historical Data
* Premium members only.
The historical data trend for Allocate Software'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.
LSE:ALLA vs SREV, ASUR: Operating Margin % Comparison
For the Software - Application subindustry, Allocate Software'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.
Allocate Software Operating Margin % vs Software Industry
For the Software industry and Technology sector, Allocate Software's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Allocate Software'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.
Allocate Software's Operating Margin % for the fiscal year that ended in May. 2014 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.
Allocate Software (LSE:ALLA) has a Operating Margin % of 21.14% as of May. 2014. Operating margin is the ratio of total operating income to net sales. View historical data on Allocate Software and its competitors. This is 280% above median its historical median of 5.57.
Is Allocate Software's Operating Margin % too high?
Allocate Software's current Operating Margin % of 21.14% is 280% above median its 10-year median of 5.57. The Software industry median Operating Margin % is 3.87. Allocate Software's value of 21.14% is 447% above this industry median.
How does Allocate Software's Operating Margin % compare to SREV and ASUR?
Allocate Software's Operating Margin % of 21.14% can be compared against companies in the Software industry. The industry median Operating Margin % is 3.87. Allocate Software's value of 21.14% is 447% above this benchmark. While the company's 10-year median is 5.57 vs. the industry median of 3.87, Allocate Software 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 Software company?
The median Operating Margin % among Software companies is 3.87, based on 2,820 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. Allocate Software's current Operating Margin % of 21.14% is 447% 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 Allocate Software and its competitors. For the Software industry, the median Operating Margin % is 3.87 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Allocate Software's current Operating Margin % is 21.14%, which is 280% above median its own 10-year median of 5.57. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Allocate Software stock overvalued right now?
Allocate Software (LSE:ALLA) has a current Operating Margin % of 21.14%. The current Operating Margin % is 21.14%, which is 280% above median its 10-year median of 5.57 and 447% above the Software industry median of 3.87. 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 Allocate Software (LSE:ALLA), the current Operating Margin % is 21.14% as of May. 2014. 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.
Allocate Software PLC is engaged in the development, sale and support of workforce management solutions, and the provision of related IT services to major healthcare, defence, government and commercial customers. The business of the company is focused principally on the Healthcare market in addition to Defence. Its segments are Licence, Subscriptions, Support, and Services. Licence and Subscriptions segments represent the sale of non-cancellable software licence agreements and subscriptions associated with that software. Support and Services segments represent the provision of installation, consulting, training and product support. It operates in UK, Europe, USA and Australia.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
LSE:ALLA has been successfully added to your 