Insights Into Amazon.com's Performance Versus Peers In Broadline Retail Sector

In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Amazon.com AMZN alongside its primary competitors in the Broadline Retail industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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.

After a detailed analysis of Amazon.com, the following trends become apparent:

• At 46.88, the stock's Price to Earnings ratio significantly exceeds the industry average by 2.22x, suggesting a premium valuation relative to industry peers.

• The elevated Price to Book ratio of 8.9 relative to the industry average by 1.68x suggests company might be overvalued based on its book value.

• The stock's relatively high Price to Sales ratio of 3.78, surpassing the industry average by 2.26x, may indicate an aspect of overvaluation in terms of sales performance.

• With a Return on Equity (ROE) of 6.19% that is 0.93% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

• With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion, which is 4.6x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

• With higher gross profit of $31.0 Billion, which indicates 2.15x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 11.04% exceeds the industry average of 7.84%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

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 analyzing Amazon.com in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

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

• This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively 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 within the industry sector.

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