Evaluating Amazon.com Against Peers In Broadline Retail Industry

In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. 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.

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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 closer analysis of Amazon.com, the following trends become apparent:

• A Price to Earnings ratio of 33.24 significantly below the industry average by 0.82x suggests undervaluation. This can make the stock appealing for those seeking growth.

• The elevated Price to Book ratio of 7.08 relative to the industry average by 1.31x suggests company might be overvalued based on its book value.

• The Price to Sales ratio of 3.37, which is 1.95x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The Return on Equity (ROE) of 5.79% is 0.96% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

• With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $36.48 Billion, which is 4.81x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.

• The gross profit of $78.69 Billion is 4.67x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 8.62% exceeds the industry average of 4.25%, indicating strong sales performance and market outperformance.

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.

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

• In terms of the debt-to-equity ratio, Amazon.com has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.44.

Key Takeaways

For Amazon.com, the PE ratio is low compared to its peers, indicating potential undervaluation. The high PB and PS ratios suggest the market values the company's assets and sales highly. In terms of ROE, Amazon.com's performance is lower than its peers, while its high EBITDA and gross profit margins indicate strong operational efficiency. Additionally, the company's high revenue growth rate outpaces its industry competitors, reflecting a positive outlook for future earnings potential.

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