Comparative Study: Amazon.com And Industry Competitors In Broadline Retail Industry

In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Amazon.com AMZN in relation to its major competitors in the Broadline Retail industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within the industry.

Amazon.com Background

Amazon is a leading online retailer and one of the highest-grossing e-commerce aggregators, with $386 billion in net sales and approximately $578 billion in estimated physical/digital online gross merchandise volume in 2021. Retail-related revenue represents approximately 80% of the total, followed by Amazon Web Services' cloud computing, storage, database, and other offerings (10%-15%), advertising services (5%), and other. International segments constitute 25%-30% of Amazon's non-AWS sales, led by Germany, the United Kingdom, and Japan.

When closely examining Amazon.com, the following trends emerge:

• At 80.37, the stock's Price to Earnings ratio significantly exceeds the industry average by 3.01x, suggesting a premium valuation relative to industry peers.

• With a Price to Book ratio of 8.67, which is 1.51x the industry average, Amazon.com might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

• With a relatively high Price to Sales ratio of 2.88, which is 1.48x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 5.62% that is 0.7% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.13 Billion is 4.69x above the industry average, highlighting stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $24.54 Billion, which indicates 1.98x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 12.57% is significantly lower compared to the industry average of 16.97%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

By analyzing Amazon.com in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

• When considering the debt-to-equity ratio, Amazon.com exhibits a stronger financial position compared to its top 4 peers.

• This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.75, which can be perceived as a positive aspect by investors.

Key Takeaways

Amazon.com has a high PE ratio, indicating that its stock price is relatively high compared to its earnings. The high PB ratio suggests that the market values Amazon.com's assets at a premium. The high PS ratio indicates that investors are willing to pay a higher price for each dollar of Amazon.com's sales. On the other hand, Amazon.com's high ROE, EBITDA, and gross profit suggest strong profitability and efficient operations. However, the low revenue growth suggests that Amazon.com's sales growth is slower compared to its peers in the Broadline Retail industry.

This article was generated by Benzinga's automated content engine and reviewed by an editor.