Investigating Amazon.com's Standing In Broadline Retail Industry Compared To Competitors

In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Amazon.com AMZN and its primary competitors in the Broadline Retail industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 closely examining Amazon.com, we can identify the following trends:

• Notably, the current Price to Earnings ratio for this stock, 42.39, is 2.09x above the industry norm, reflecting a higher valuation relative to the industry.

• With a Price to Book ratio of 8.05, which is 1.55x 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 3.42, which is 2.12x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a lower Return on Equity (ROE) of 6.19%, which is 2.1% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion is 4.23x above the industry average, highlighting stronger profitability and robust cash flow generation.

• The company has higher gross profit of $31.0 Billion, which indicates 2.11x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 11.04% is significantly lower compared to the industry average of 11.42%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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.

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

• Compared to its top 4 peers, Amazon.com has a stronger financial position indicated by its lower debt-to-equity ratio of 0.52.

• 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 overvaluation. The low ROE suggests lower profitability relative to its high EBITDA and gross profit margins. Additionally, the low revenue growth implies a slower expansion rate compared to industry peers.

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