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Educational Development Corp  (NAS:EDUC) Operating Margin %: 6.41% (As of Aug. 2017)

Operating Margin % is calculated as Operating Income divided by its Revenue. Educational Development Corp's Operating Income for the three months ended in Aug. 2017 was $1.6 Mil. Educational Development Corp's Revenue for the three months ended in Aug. 2017 was $24.2 Mil. Therefore, Educational Development Corp's Operating Margin % for the quarter that ended in Aug. 2017 was 6.41%.

Warning Sign:

Educational Development Corp operating margin has been in 5-year decline. The average rate of decline per year is -10.6%.

NAS:EDUC' s Operating Margin % Range Over the Past 10 Years
Min: 3.7   Max: 11.65
Current: 5.64

3.7
11.65

NAS:EDUC's Operating Margin % is ranked lower than
52% of the 195 Companies
in the Global industry.

( Industry Median: 4.78 vs. NAS:EDUC: 5.64 )

Educational Development Corp's 5-Year Average operating margin Growth Rate was -10.60% per year.

Educational Development Corp's Operating Income for the three months ended in Aug. 2017 was $1.6 Mil. Its operating income for the trailing twelve months (TTM) ended in Aug. 2017 was $6.1 Mil.

Warning Sign:

Educational Development Corp had operating loss over the past 3 years.


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.

Educational Development Corp Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
Operating Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.82 4.80 4.26 5.21 3.70

Educational Development Corp Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
Operating 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 1.51 5.87 3.31 7.02 6.41

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

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.

Educational Development Corp's Operating Margin for the fiscal year that ended in Feb. 2017 is calculated as

Operating Margin %=Operating Income (A: Feb. 2017 ) / Revenue (A: Feb. 2017 )
=3.946 / 106.628
=3.70 %

Educational Development Corp's Operating Margin for the quarter that ended in Aug. 2017 is calculated as

Operating Margin %=Operating Income (Q: Aug. 2017 ) / Revenue (Q: Aug. 2017 )
=1.551 / 24.181
=6.41 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

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

Compared with a company's EBITDA margin, 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 Nokia’s Operating Margin had already been in decline since 2002, although its earnings per share 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.


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