In-Depth Analysis: Amazon.com Versus Competitors In Broadline Retail Industry

In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Amazon.com AMZN alongside its primary competitors in the Broadline Retail industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer 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 closely studying Amazon.com, we can observe the following trends:

• The current Price to Earnings ratio of 38.46 is 1.63x 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 7.88, which is 1.33x 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 3.57, which is 2.12x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The Return on Equity (ROE) of 7.34% aligns with the industry average, indicating a balanced performance in utilizing equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.61x above the industry average, indicating stronger profitability and robust cash flow generation.

• The gross profit of $37.37 Billion is 2.47x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company is witnessing a substantial decline in revenue growth, with a rate of 10.49% compared to the industry average of 12.77%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

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 terms of the Debt-to-Equity ratio, Amazon.com can be assessed by comparing it to its top 4 peers, resulting in the following observations:

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

• This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.46, which can be perceived as a positive aspect by investors.

Key Takeaways

For Amazon.com, the PE, PB, and PS ratios are all high compared to its peers in the Broadline Retail industry, indicating potentially overvalued stock. However, the ROE is equal, suggesting Amazon.com is performing in line with its industry peers. Additionally, Amazon.com's high EBITDA and gross profit signify strong operational performance, while the low revenue growth may raise concerns about future prospects compared to industry peers.

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