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Rio Tinto PLC  (NYSE:RIO) Operating Margin %: 31.69% (As of Jun. 2017)

Operating Margin % is calculated as Operating Income divided by its Revenue. Rio Tinto PLC's Operating Income for the six months ended in Jun. 2017 was $6,123 Mil. Rio Tinto PLC's Revenue for the six months ended in Jun. 2017 was $19,319 Mil. Therefore, Rio Tinto PLC's Operating Margin % for the quarter that ended in Jun. 2017 was 31.69%.

NYSE:RIO' s Operating Margin % Range Over the Past 10 Years
Min: -3.78   Max: 35.54
Current: 28.78

-3.78
35.54

NYSE:RIO's Operating Margin % is ranked higher than
89% of the 753 Companies
in the Global industry.

( Industry Median: 3.41 vs. NYSE:RIO: 28.78 )

Rio Tinto PLC's 5-Year Average operating margin Growth Rate was 0.00% per year.

Rio Tinto PLC's Operating Income for the six months ended in Jun. 2017 was $6,123 Mil. Its operating income for the trailing twelve months (TTM) ended in Jun. 2017 was $6,795 Mil.


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.

Rio Tinto PLC Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Operating Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -3.78 14.52 23.80 10.38 20.11

Rio Tinto PLC Semi-Annual Data

Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17
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 18.45 1.76 13.45 25.77 31.69

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.

Rio Tinto PLC's Operating Margin for the fiscal year that ended in Dec. 2016 is calculated as

Operating Margin %=Operating Income (A: Dec. 2016 ) / Revenue (A: Dec. 2016 )
=6795 / 33781
=20.11 %

Rio Tinto PLC's Operating Margin for the quarter that ended in Jun. 2017 is calculated as

Operating Margin %=Operating Income (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 )
=6123 / 19319
=31.69 %

* 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.


Related Terms


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