Insights Into Amazon.com's Performance Versus Peers In Broadline Retail Sector

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.

When conducting a detailed analysis of Amazon.com, the following trends become clear:

• A Price to Earnings ratio of 37.68 significantly below the industry average by 0.97x suggests undervaluation. This can make the stock appealing for those seeking growth.

• The elevated Price to Book ratio of 7.72 relative to the industry average by 1.36x suggests company might be overvalued based on its book value.

• The Price to Sales ratio of 3.5, which is 2.12x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• With a Return on Equity (ROE) of 7.34% that is 1.19% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

• The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.62x above the industry average, indicating stronger profitability and robust cash flow generation.

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

• The company's revenue growth of 10.49% is significantly lower compared to the industry average of 16.34%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

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 0.46, 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 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 the company's assets and sales highly. In terms of ROE, Amazon.com lags behind its industry peers, reflecting lower profitability from shareholder equity. However, the high EBITDA, gross profit, and revenue growth signify 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.