Assessing Amazon.com's Performance Against Competitors In Broadline Retail Industry

In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Amazon.com AMZN alongside its primary competitors in the Broadline Retail industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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.

By conducting a comprehensive analysis of Amazon.com, the following trends become evident:

• At 51.53, the stock's Price to Earnings ratio is 0.82x less than the industry average, suggesting favorable growth potential.

• The elevated Price to Book ratio of 8.84 relative to the industry average by 1.69x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.29, which is 1.96x the industry average, the stock might be considered overvalued based on sales performance.

• The Return on Equity (ROE) of 4.98% is 1.45% above the industry average, highlighting efficient use of equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.31 Billion, which is 5.29x above the industry average, indicating stronger profitability and robust cash flow generation.

• The gross profit of $27.94 Billion is 2.19x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• With a revenue growth of 12.53%, which is much lower than the industry average of 18.87%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

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 analyzing Amazon.com in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

• Among its top 4 peers, Amazon.com has a stronger financial position with a lower debt-to-equity ratio of 0.62.

• This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.

Key Takeaways

For Amazon.com, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers in the Broadline Retail industry. 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 compared to industry peers.

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