Comparing Amazon.com With 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 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.

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

• The current Price to Earnings ratio of 44.88 is 1.86x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 8.52 which exceeds the industry average by 1.64x.

• With a relatively high Price to Sales ratio of 3.62, which is 2.0x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 6.19% that is 0.23% 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 $32.08 Billion, which is 4.61x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $31.0 Billion, which indicates 1.91x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 11.04% is significantly lower compared to the industry average of 13.41%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.

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 examining Amazon.com in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

• 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 0.52.

Key Takeaways

For Amazon.com, the PE, PB, and PS ratios are all high compared to its peers in the Broadline Retail industry, indicating that the stock may be overvalued. The low ROE suggests that Amazon.com is not generating strong returns on shareholder equity. However, the high EBITDA and gross profit margins show that the company is efficient in generating profits from its operations. The low revenue growth rate may be a concern for Amazon.com's future performance compared to its industry peers.

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