Industry Comparison: Evaluating Amazon.com Against Competitors In Broadline Retail Industry

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.

When closely examining Amazon.com, the following trends emerge:

• The Price to Earnings ratio of 50.22 for this company is 2.35x above the industry average, indicating a premium valuation associated with the stock.

• The elevated Price to Book ratio of 9.54 relative to the industry average by 1.79x suggests company might be overvalued based on its book value.

• The Price to Sales ratio of 4.05, which is 2.37x 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 6.19% is 0.93% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

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

• Compared to its industry, the company has higher gross profit of $31.0 Billion, which indicates 2.15x above the industry average, indicating 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 7.92%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.

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:

• 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 overvaluation. The low ROE suggests lower profitability compared to industry peers. However, Amazon.com's high EBITDA, gross profit, and revenue growth indicate strong operational performance and growth potential within the industry sector.

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