Inquiry Into Amazon.com's Competitor Dynamics In Broadline Retail Industry

In the dynamic 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 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 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.

By closely examining Amazon.com, we can identify the following trends:

• Notably, the current Price to Earnings ratio for this stock, 80.54, is 2.97x above the industry norm, reflecting a higher valuation relative to the industry.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 8.69 which exceeds the industry average by 1.5x.

• With a relatively high Price to Sales ratio of 2.89, which is 1.47x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 5.62% that is 0.7% 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 $25.13 Billion, which is 4.69x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $24.54 Billion, which indicates 1.98x 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 lower compared to the industry average of 16.97%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage 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.

In light of the Debt-to-Equity ratio, a comparison between Amazon.com and its top 4 peers reveals the following information:

• When comparing the debt-to-equity ratio, Amazon.com is in a stronger financial position compared to its top 4 peers.

• The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.75.

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.