Market Analysis: Amazon.com And Competitors In Broadline Retail Industry

In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial 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 conducting a detailed analysis of Amazon.com, the following trends become clear:

• The Price to Earnings ratio of 32.66 is 0.81x lower than the industry average, indicating potential undervaluation for the stock.

• The elevated Price to Book ratio of 6.7 relative to the industry average by 1.32x suggests company might be overvalued based on its book value.

• The stock's relatively high Price to Sales ratio of 3.04, surpassing the industry average by 1.95x, may indicate an aspect of overvaluation in terms of sales performance.

• The company has a higher Return on Equity (ROE) of 7.34%, which is 2.08% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.31x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $88.9 Billion, which indicates 5.23x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company is experiencing remarkable revenue growth, with a rate of 10.49%, outperforming the industry average of 4.68%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared 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.

When evaluating Amazon.com alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

• Amazon.com is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.46.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

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. In terms of ROE, EBITDA, gross profit, and revenue growth, Amazon.com outperforms its industry peers, reflecting strong financial performance and growth potential.

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