Comparative Study: Amazon.com And Industry Competitors In Broadline Retail Industry

In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Amazon.com AMZN vis-à-vis its key competitors in the Broadline Retail industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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.

Through an analysis of Amazon.com, we can infer the following trends:

• The current Price to Earnings ratio of 76.9 is 2.95x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• With a Price to Book ratio of 8.29, which is 1.48x 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 2.76, which is 1.43x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a higher Return on Equity (ROE) of 5.62%, which is 0.7% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.13 Billion is 4.69x above the industry average, highlighting stronger profitability and robust cash flow generation.

• The gross profit of $24.54 Billion is 1.98x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• With a revenue growth of 12.57%, which is much lower than the industry average of 16.87%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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 comparing Amazon.com with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

• 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 high ROE, EBITDA, and gross profit suggest strong profitability and efficient operations. However, the low revenue growth suggests that Amazon.com's sales growth is slower compared to its peers in the Broadline Retail industry.

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