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

In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Amazon.com AMZN against its key competitors in the Broadline Retail industry. By examining key 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.

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

• At 41.44, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.75x, suggesting a premium valuation relative to industry peers.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 8.49 which exceeds the industry average by 1.4x.

• The Price to Sales ratio of 3.85, which is 2.24x 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 0.94% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

• With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion, which is 4.91x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

• The gross profit of $31.0 Billion is 2.29x 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 7.83%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage 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.

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

• Amazon.com demonstrates a stronger financial position compared to its top 4 peers in the sector.

• With a lower debt-to-equity ratio of 0.52, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.

Key Takeaways

For PE, PB, and PS ratios, Amazon.com is considered overvalued compared to its peers in the Broadline Retail industry. This is indicated by the high PE, PB, and PS ratios. In terms of ROE, EBITDA, gross profit, and revenue growth, Amazon.com's performance is below average within the industry sector. The low ROE and high EBITDA, gross profit, and revenue growth suggest potential areas for improvement in Amazon.com's financial performance relative to its peers.

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