Assessing Amazon.com's Performance Against Competitors In Broadline Retail Industry

In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess 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.

By conducting a comprehensive analysis of Amazon.com, the following trends become evident:

• The Price to Earnings ratio of 44.48 for this company is 1.88x above the industry average, indicating a premium valuation associated with the stock.

• With a Price to Book ratio of 8.27, which is 1.53x 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.

• The Price to Sales ratio of 3.28, which is 1.8x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The Return on Equity (ROE) of 5.95% is 0.35% above the industry average, highlighting efficient use of equity to generate profits.

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

• With higher gross profit of $28.32 Billion, which indicates 1.74x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 10.12% is significantly below the industry average of 13.16%. This suggests a potential struggle in generating increased sales volume.

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 evaluating Amazon.com against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:

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

• 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, 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.