Investigating Amazon.com's Standing In Broadline Retail Industry Compared To Competitors

In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Amazon.com AMZN and its primary competitors in the Broadline Retail industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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.

By closely examining Amazon.com, we can identify the following trends:

• With a Price to Earnings ratio of 35.18, which is 0.99x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• With a Price to Book ratio of 7.21, which is 1.34x 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 3.27, which is 2.07x the industry average, the stock might be considered overvalued based on sales performance.

• The company has a lower Return on Equity (ROE) of 7.34%, which is 1.58% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.62x above the industry average, indicating stronger profitability and robust cash flow generation.

• The company has higher gross profit of $37.37 Billion, which indicates 2.47x above the industry average, indicating 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 22.22%. This indicates a potential fall in the company's sales performance.

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.

By evaluating Amazon.com against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:

• Amazon.com has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.46.

• This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.

Key Takeaways

For the PE, PB, and PS ratios, Amazon.com is considered to have a low PE ratio, indicating potential undervaluation compared to its peers. However, its high PB and PS ratios suggest that the market values the company's assets and sales more highly. In terms of ROE, EBITDA, gross profit, and revenue growth, Amazon.com shows lower profitability and growth compared to its industry peers, which may impact its overall valuation within the Broadline Retail sector.

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