Assessing Amazon.com's Performance Against Competitors In Broadline Retail Industry

In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. 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.

Upon closer analysis of Amazon.com, the following trends become apparent:

• At 41.66, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.71x, suggesting a premium valuation relative to industry peers.

• The elevated Price to Book ratio of 8.54 relative to the industry average by 1.37x suggests company might be overvalued based on its book value.

• The stock's relatively high Price to Sales ratio of 3.87, surpassing the industry average by 2.16x, may indicate an aspect of overvaluation in terms of sales performance.

• The company has a lower Return on Equity (ROE) of 6.19%, which is 0.94% 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 4.91x 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 2.29x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 11.04%, which surpasses the industry average of 7.83%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

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:

• 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 industry peers.

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