Understanding Amazon.com's Position 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:

• The current Price to Earnings ratio of 48.6 is 2.25x 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 9.23 relative to the industry average by 1.71x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.92, which is 2.29x the industry average, the stock might be considered overvalued based on sales performance.

• The company has a lower Return on Equity (ROE) of 6.19%, which is 0.93% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion, which is 4.59x above the industry average, indicating stronger profitability and robust cash flow generation.

• The gross profit of $31.0 Billion is 2.14x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company is experiencing remarkable revenue growth, with a rate of 11.04%, outperforming the industry average of 7.84%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

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:

• 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 that the stock may be overvalued. The low ROE suggests that Amazon.com is not generating significant returns on shareholder equity. However, the high EBITDA, gross profit, and revenue growth show strong operational performance and potential for future growth in the industry sector analysis.

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