Assessing Amazon.com's Performance Against Competitors In Broadline Retail Industry

In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Amazon.com AMZN in relation to its major competitors in the Broadline Retail industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 conducting a comprehensive analysis of Amazon.com, the following trends become evident:

• At 34.88, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.01x, suggesting a premium valuation relative to industry peers.

• The elevated Price to Book ratio of 7.31 relative to the industry average by 1.3x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.68, which is 1.88x the industry average, the stock might be considered overvalued based on sales performance.

• The company has a higher Return on Equity (ROE) of 5.68%, which is 1.11% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $36.6 Billion, which is 10.11x 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 5.47x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 13.33% exceeds the industry average of 8.5%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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 assessing Amazon.com against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• 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 0.4.

• 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 a potentially overvalued stock. On the other hand, Amazon.com's high ROE, EBITDA, gross profit, and revenue growth suggest strong operational performance and growth potential relative to industry competitors. It is important to consider both valuation multiples and operational metrics when evaluating Amazon.com within the Broadline Retail sector.

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