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

In the fast-paced 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 in comparison to its major competitors within the Broadline Retail industry. By analyzing crucial 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 a leading online retailer and one of the highest-grossing e-commerce aggregators, with $386 billion in net sales and approximately $578 billion in estimated physical/digital online gross merchandise volume in 2021. Retail-related revenue represents approximately 80% of the total, followed by Amazon Web Services' cloud computing, storage, database, and other offerings (10%-15%), advertising services (5%), and other. International segments constitute 25%-30% of Amazon's non-AWS sales, led by Germany, the United Kingdom, and Japan.

Upon a comprehensive analysis of Amazon.com, the following trends can be discerned:

• The Price to Earnings ratio of 75.35 for this company is 2.44x above the industry average, indicating a premium valuation associated with the stock.

• With a Price to Book ratio of 8.13, which is 1.47x 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 stock's relatively high Price to Sales ratio of 2.7, surpassing the industry average by 1.3x, may indicate an aspect of overvaluation in terms of sales performance.

• With a Return on Equity (ROE) of 5.62% that is 0.93% below the industry average, it appears that the company exhibits 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 $25.13 Billion, which is 4.59x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $24.54 Billion, which indicates 1.96x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 12.57% is significantly below the industry average of 12.69%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

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 has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.75.

• 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

Amazon.com has a high PE ratio, indicating that its stock price is relatively high compared to its earnings. The high PB ratio suggests that the market values Amazon.com's assets at a premium. The high PS ratio indicates that investors are willing to pay a higher price for each dollar of Amazon.com's sales. On the other hand, Amazon.com's low ROE suggests that it is not generating significant returns on shareholders' equity. The high EBITDA and gross profit indicate strong profitability, while the low revenue growth suggests slower expansion compared to its peers in the Broadline Retail industry.

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