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

In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Amazon.com AMZN alongside its primary competitors in the Broadline Retail industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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.

Upon closer analysis of Amazon.com, the following trends become apparent:

• The stock's Price to Earnings ratio of 34.56 is lower than the industry average by 0.9x, suggesting potential value in the eyes of market participants.

• The elevated Price to Book ratio of 7.08 relative to the industry average by 1.47x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.21, which is 2.18x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 7.34% that is 2.08% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• 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 $88.9 Billion is 5.46x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 10.49% exceeds the industry average of 10.33%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

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:

• Compared to its top 4 peers, Amazon.com has a stronger financial position indicated by its lower debt-to-equity ratio of 0.46.

• This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute 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 Amazon.com's assets and sales highly. Amazon.com's high ROE, EBITDA, gross profit, and revenue growth reflect strong financial performance relative to industry peers, indicating efficient operations and growth potential.

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