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

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.

Through a meticulous analysis of Amazon.com, we can observe the following trends:

• The stock's Price to Earnings ratio of 37.07 is lower than the industry average by 0.96x, suggesting potential value in the eyes of market participants.

• The elevated Price to Book ratio of 7.6 relative to the industry average by 1.35x suggests company might be overvalued based on its book value.

• The stock's relatively high Price to Sales ratio of 3.45, surpassing the industry average by 2.14x, may indicate an aspect of overvaluation in terms of 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 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion is 5.62x above the industry average, highlighting stronger profitability and robust cash flow generation.

• The gross profit of $37.37 Billion is 2.47x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 10.49% is significantly below the industry average of 15.06%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative 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.

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 has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.46.

• This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.

Key Takeaways

For the PE, PB, and PS ratios, Amazon.com is considered to have a low PE ratio, indicating potential undervaluation compared to its peers. However, its high PB and PS ratios suggest that the market values the company's assets and sales more highly. In terms of ROE, EBITDA, gross profit, and revenue growth, Amazon.com shows lower profitability and growth compared to its industry peers, which may impact its overall valuation within the Broadline Retail sector.

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