Margins matter. The more Coeur d'Alene Mines (NYSE: CDE) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. That's why I check on my holdings' margins at least once a quarter. I'm looking for the absolute numbers, comparisons to sector peers and competitors, and any trend that may tell me how strong Coeur d'Alene Mines' competitive position could be.

Here's the current margin snapshot for Coeur d'Alene Mines and some of its sector and industry peers, and direct competitors.


TTM Gross Margin

TTM Operating Margin

TTM Net Margin

 Coeur d'Alene Mines




 Goldcorp (NYSE: GG)




 Hecla Mining (NYSE: HL)




 Kinross Gold (NYSE: KGC)




 Agnico-Eagle Mines (NYSE: AEM)




Source: Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months.

Unfortunately, that chart doesn't tell us much about where Coeur d'Alene Mines has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months (TTM), the latest fiscal year, and the latest fiscal quarter (LFQ). You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for Coeur d'Alene Mines over the past few years.

(Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them.)

Here's how the stats break down:

  • Over the past five years, gross margin peaked at 57.3% and averaged 39.4%. Operating margin peaked at 31.7% and averaged 0%. Net margin peaked at 40.9% and averaged 11.8%.
  • Fiscal year 2009 gross margin was 32.5%, 690 basis points worse than the five-year average. Fiscal year 2009 operating margin was (36.4%), 3,640 basis points worse than the five-year average. Fiscal year 2009 net margin was (10.6%), 2,240 basis points worse than the five-year average.
  • TTM gross margin is 36.5%, 290 basis points worse than the five-year average. TTM operating margin is (26.4%), 2,640 basis points worse than the five-year average. TTM net margin is (28.6%), 4,040 basis points worse than the five-year average.
  • LFQ gross margin was 41.4%, 1,060 basis points better than the prior-year quarter. LFQ operating margin was 1.8%, 1,950 basis points better than the prior-year quarter. LFQ net margin was (50.2%), 6,610 basis points worse than the prior-year quarter.

With recent 12-month-period operating margins below historical averages, Coeur d'Alene Mines has some work to do. There may be some hope in the latest quarter's results, but only time will tell.

If you take the time to read past the headlines and crack an SEC filing now and then, you're probably ahead of 95% of the market's individual investors. To stay ahead, learn more about how I use analysis like this to help me uncover the home run stock you're too afraid to buy.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.