Evaluating Amazon.com Against Peers In Broadline Retail Industry

In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Amazon.com AMZN against its key competitors in the Broadline Retail industry. By analyzing important 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.

By closely studying Amazon.com, we can observe the following trends:

• The Price to Earnings ratio of 34.75 is 0.88x lower than the industry average, indicating potential undervaluation for the stock.

• With a Price to Book ratio of 7.12, which is 1.41x the industry average, Amazon.com might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

• The Price to Sales ratio of 3.23, which is 2.01x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• 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 5.23x above the industry average, indicating stronger profitability and robust cash flow generation.

• The gross profit of $37.37 Billion is 2.29x 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 11.34%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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:

• 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 Amazon.com in the Broadline Retail industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry competitors. In terms of ROE, Amazon.com shows lower profitability, while EBITDA and gross profit margins are higher, reflecting strong operational performance. However, the revenue growth rate is lower compared to industry peers, potentially impacting future earnings potential.

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