Evaluating Amazon.com Against Peers In Broadline Retail Industry

Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Amazon.com AMZN in comparison to its major competitors within the Broadline Retail industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 thoroughly examining Amazon.com, the following trends can be inferred:

• With a Price to Earnings ratio of 37.75, which is 0.96x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• The elevated Price to Book ratio of 7.74 relative to the industry average by 1.34x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.51, which is 2.13x the industry average, the stock might be considered overvalued based on sales performance.

• The company has a lower Return on Equity (ROE) of 7.34%, which is 0.52% 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 $38.55 Billion, which is 5.6x above the industry average, indicating stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $37.37 Billion, which indicates 2.47x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 10.49%, which is much lower than the industry average of 15.03%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

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 assessing Amazon.com against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• When comparing the debt-to-equity ratio, Amazon.com is in a stronger financial position compared to its top 4 peers.

• The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.46.

Key Takeaways

For Amazon.com, the PE ratio is low compared to its peers in the Broadline Retail industry, indicating potential undervaluation. The high PB and PS ratios suggest that the market values Amazon.com's assets and sales highly. A low ROE implies lower profitability compared to industry peers, while high EBITDA and gross profit signify strong operational performance. The low revenue growth rate may indicate challenges in expanding the top line compared to competitors in the industry.

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