Industry Comparison: Evaluating Amazon.com Against Competitors In Broadline Retail Industry

In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Amazon.com AMZN and its primary competitors in the Broadline Retail industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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.

When closely examining Amazon.com, the following trends emerge:

• A Price to Earnings ratio of 36.41 significantly below the industry average by 0.93x suggests undervaluation. This can make the stock appealing for those seeking growth.

• The elevated Price to Book ratio of 7.46 relative to the industry average by 1.4x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.38, which is 2.04x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 7.34% is 0.12% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.24x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $37.37 Billion, which indicates 2.3x above the industry average, the company demonstrates 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 14.43%, the company is experiencing a notable slowdown in sales expansion.

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.

When examining Amazon.com in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

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

• This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.46, which can be perceived as a positive aspect by investors.

Key Takeaways

For Amazon.com in the Broadline Retail industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest the market values the company's assets and sales highly. In terms of ROE, Amazon.com has a lower return on equity compared to industry peers. However, the high EBITDA, gross profit, and low revenue growth indicate strong operational performance and profitability relative to competitors.

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