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

In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Amazon.com AMZN against its key competitors in the Broadline Retail industry. By analyzing important 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.

Upon analyzing Amazon.com, the following trends can be observed:

• With a Price to Earnings ratio of 50.71, which is 0.63x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• The elevated Price to Book ratio of 8.7 relative to the industry average by 1.63x suggests company might be overvalued based on its book value.

• With a relatively high Price to Sales ratio of 3.24, which is 1.8x the industry average, the stock might be considered overvalued based on sales performance.

• The company has a higher Return on Equity (ROE) of 4.98%, which is 0.34% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $25.31 Billion, which is 5.23x above the industry average, implying stronger profitability and robust cash flow generation.

• The company has higher gross profit of $27.94 Billion, which indicates 2.17x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of -15.68% is significantly below the industry average of 12.98%. This suggests a potential struggle in generating increased sales volume.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its 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.

In light of the Debt-to-Equity ratio, a comparison between Amazon.com and its top 4 peers reveals the following information:

• Amazon.com demonstrates a stronger financial position compared to its top 4 peers in the sector.

• With a lower debt-to-equity ratio of 0.62, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.

Key Takeaways

For Amazon.com, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers in the Broadline Retail industry. However, the high ROE, EBITDA, gross profit, and low revenue growth suggest that Amazon.com is efficiently utilizing its resources and generating strong profits, despite slower revenue growth compared to industry peers.

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