Industry Comparison: Evaluating Amazon.com 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.

Upon a comprehensive analysis of Amazon.com, the following trends can be discerned:

• The current Price to Earnings ratio of 44.2 is 1.99x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• The elevated Price to Book ratio of 8.39 relative to the industry average by 1.65x suggests company might be overvalued based on its book value.

• The Price to Sales ratio of 3.56, which is 2.0x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a lower Return on Equity (ROE) of 6.19%, which is 0.09% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• 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.

• The company has higher gross profit of $31.0 Billion, which indicates 1.91x above the industry average, indicating 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 12.86%. This indicates a potential fall in the company's sales performance.

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 is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.52.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

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 significant returns on shareholder equity. However, the high EBITDA and gross profit margins reflect strong operational efficiency and profitability. The low revenue growth rate may be a concern for Amazon.com's future performance compared to industry peers.

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