Gross Margin % is calculated as gross profit divided by its revenue. Covidien's Gross Profit for the
three
months ended in Dec. 2014 was €1,333 Mil. Covidien's Revenue for the
three
months ended in Dec. 2014 was €2,178 Mil. Therefore, Covidien's Gross Margin % for the quarter that ended in Dec. 2014 was 61.21%.
The historical rank and industry rank for Covidien's Gross Margin % or its related term are showing as below:
FRA:6COP'
s Gross Margin % Range Over the Past 10 Years
Min: 46.5 Med: 55.66 Max: 59.96
Current: 59.85
During the past 13 years, the highestGross Margin % of Covidien was 59.96%. The lowest was 46.50%. And the median was 55.66%.
FRA:6COP's Gross Margin % is not ranked
in the Medical Devices & Instruments industry.
Industry Median: 53.335
vs FRA:6COP: 59.85
Covidien had a gross margin of 61.21% for the quarter that ended in Dec. 2014 => Durable competitive advantage
The 5-Year average Growth Rate of Gross Margin for Covidien was 1.80% per year.
Covidien Gross Margin % Historical Data
The historical data trend for Covidien'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 Covidien's Gross Margin %
For the Medical Instruments & Supplies subindustry, Covidien'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.
Covidien's Gross Margin % Distribution in the Medical Devices & Instruments Industry
For the Medical Devices & Instruments industry and Healthcare sector, Covidien's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Covidien'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.
Covidien (FRA:6COP) 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
Covidien had a gross margin of 61.21% for the quarter that ended in Dec. 2014 => Durable competitive advantage
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.
Covidien Gross Margin % Related Terms
Thank you for viewing the detailed overview of Covidien's Gross Margin % provided by GuruFocus.com. Please click on the following links to see related term pages.
Covidien PLC formerly known as Covidien Ltd. was incorporated in Bermuda in 2000 as a wholly-owned subsidiary of Tyco International Ltd. In June 2009, Covidien plc announced that one of its subsidiaries has completed the acquisition of VNUS Medical Technologies, Inc. In September 2009, the Company completed the acquisition of Power Medical Interventions Inc. In November 2009, the Company completed the acquisition of Aspect Medical Systems Inc. The Company is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. Its products are found in almost every hospital in the United States. Its mission is to create and deliver innovative healthcare solutions, developed in ethical collaboration with medical professionals. It operates through two segments: Medical Devices and Medical Supplies. The Medical Devices segment includes the development, manufacture and sale of endomechanical instruments, energy devices, soft tissue repair products, vascular products, oximetry and monitoring products, airway and ventilation products, and other medical products. The Medical Supplies segment includes the development, manufacture and sale of nursing care products, medical surgical products, SharpSafety products and original equipment manufacturer products. Competitors of Medical Devices segment include diversified healthcare companies, such as Johnson & Johnson, Boston Scientific, Baxter and C.R. Bard. Its Nursing Care products include: Curity and Kerlix and Medical Surgical products include: Medi-Trace. The Company holds more than 13,000 patents and have over 10,500 patent applications pending in the United States and in certain other countries that relate to aspects of the technology used in many of its products. The Company is subject to numerous federal, state and local environmental protection and health and safety laws and regulations both within and outside the United States.
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