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

In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating Amazon.com AMZN against its key competitors in the Broadline Retail industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for 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.

Through a thorough examination of Amazon.com, we can discern the following trends:

• A Price to Earnings ratio of 36.29 significantly below the industry average by 0.98x suggests undervaluation. This can make the stock appealing for those seeking growth.

• With a Price to Book ratio of 7.44, 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.

• With a relatively high Price to Sales ratio of 3.37, which is 2.07x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 7.34% that is 1.19% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion is 5.62x above the industry average, highlighting stronger profitability and robust cash flow generation.

• With higher gross profit of $37.37 Billion, which indicates 2.47x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 10.49% is significantly lower compared to the industry average of 16.34%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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.

When evaluating Amazon.com alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

• Among its top 4 peers, Amazon.com has a stronger financial position with a lower debt-to-equity ratio of 0.46.

• 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 the PE, PB, and PS ratios, Amazon.com is considered to have a low PE ratio, high PB ratio, and high PS ratio compared to its peers in the Broadline Retail industry. This suggests that investors are willing to pay a premium for Amazon.com's growth potential and revenue generation capabilities. In terms of ROE, EBITDA, gross profit, and revenue growth, Amazon.com exhibits a low ROE, high EBITDA, high gross profit, and low revenue growth compared to industry peers. This indicates that Amazon.com may be focusing more on profitability and operational efficiency rather than aggressive revenue expansion.

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