Assessing Amazon.com's Performance Against Competitors 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.

After a detailed analysis of Amazon.com, the following trends become apparent:

• The current Price to Earnings ratio of 60.89 is 2.14x 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 9.09, which is 1.63x 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 3.22, which is 1.68x 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 5.52%, which is 0.12% 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 $28.22 Billion, which is 5.69x above the industry average, indicating stronger profitability and robust cash flow generation.

• The company has higher gross profit of $29.27 Billion, which indicates 2.13x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 13.91%, which is much lower than the industry average of 23.84%, the company is experiencing a notable slowdown in sales expansion.

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.

By evaluating Amazon.com against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:

• Amazon.com exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.67.

• This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

For Amazon.com in the Broadline Retail industry, the PE, PB, and PS ratios are all high compared to its peers, indicating a potentially overvalued stock. On the other hand, the high ROE, EBITDA, and gross profit suggest strong profitability and operational efficiency. However, the low revenue growth rate may raise concerns about the company's future performance relative to industry competitors.

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