Competitor Analysis: Evaluating Amazon.com And Competitors In Broadline Retail Industry

In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Amazon.com AMZN against its key competitors in the Broadline Retail industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide 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.

Upon a comprehensive analysis of Amazon.com, the following trends can be discerned:

• The current Price to Earnings ratio of 45.62 is 1.89x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• The elevated Price to Book ratio of 8.49 relative to the industry average by 1.55x suggests company might be overvalued based on its book value.

• The stock's relatively high Price to Sales ratio of 3.36, surpassing the industry average by 1.83x, may indicate an aspect of overvaluation in terms of sales performance.

• The company has a higher Return on Equity (ROE) of 5.95%, which is 0.35% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $27.87 Billion, which is 4.03x above the industry average, implying stronger profitability and robust cash flow generation.

• The gross profit of $28.32 Billion is 1.74x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company is witnessing a substantial decline in revenue growth, with a rate of 10.12% compared to the industry average of 13.16%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative 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.

In terms of the Debt-to-Equity ratio, Amazon.com can be assessed by comparing it to its top 4 peers, resulting in the following observations:

• Compared to its top 4 peers, Amazon.com has a stronger financial position indicated by its lower debt-to-equity ratio of 0.56.

• This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.

Key Takeaways

For Amazon.com, the PE, PB, and PS ratios are all high compared to its peers in the Broadline Retail industry, indicating that the stock may be overvalued. On the other hand, Amazon.com's high ROE, EBITDA, gross profit, and low revenue growth suggest strong operational efficiency and profitability relative to industry competitors.

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