Inquiry Into Amazon.com's Competitor Dynamics 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 the leading online retailer and marketplace for third party sellers. Retail related revenue represents approximately 75% of total, followed by Amazon Web Services' cloud computing, storage, database, and other offerings (15%), advertising services (5% to 10%), and other the remainder. International segments constitute 25% to 30% of Amazon's non-AWS sales, led by Germany, the United Kingdom, and Japan.

By conducting an in-depth analysis of Amazon.com, we can identify the following trends:

• The Price to Earnings ratio of 52.13 is 0.81x lower than the industry average, indicating potential undervaluation for the stock.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 8.94 which exceeds the industry average by 1.73x.

• The stock's relatively high Price to Sales ratio of 3.33, surpassing the industry average by 1.88x, may indicate an aspect of overvaluation in terms of sales performance.

• With a Return on Equity (ROE) of 4.98% that is 1.45% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.31 Billion, which is 5.27x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $27.94 Billion, which indicates 2.19x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• With a revenue growth of 12.53%, which is much lower than the industry average of 15.27%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

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.

In terms of the Debt-to-Equity ratio, Amazon.com stands in comparison with its top 4 peers, leading to the following comparisons:

• Amazon.com has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.62.

• This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.

Key Takeaways

For Amazon.com in the Broadline Retail industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, and gross profit, Amazon.com demonstrates strong performance compared to industry peers. However, the low revenue growth rate may raise concerns about future prospects in the industry sector.

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