Understanding Amazon.com's Position In Broadline Retail Industry Compared To Competitors

Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Amazon.com AMZN in comparison to its major competitors within the Broadline Retail industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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.

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

• A Price to Earnings ratio of 34.23 significantly below the industry average by 0.99x suggests undervaluation. This can make the stock appealing for those seeking growth.

• With a Price to Book ratio of 7.18, which is 1.29x 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 3.61, which is 1.9x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• With a Return on Equity (ROE) of 5.68% that is 0.97% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $36.6 Billion, which is 8.82x above the industry average, indicating stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $86.89 Billion, which indicates 5.69x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 13.33%, which surpasses the industry average of 8.47%, the company is demonstrating robust sales expansion and gaining market share.

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.

When comparing Amazon.com with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

• Amazon.com exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.4.

• This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

The low P/E ratio suggests Amazon.com may be undervalued compared to its peers in the Broadline Retail industry. However, the high P/B and P/S ratios indicate that the market values Amazon.com's assets and sales more highly. Amazon.com's high ROE, EBITDA, gross profit, and revenue growth suggest strong financial performance relative to industry peers.

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