Evaluating Amazon.com Against Peers In Broadline Retail Industry

In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Amazon.com AMZN vis-à-vis its key competitors in the Broadline Retail industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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.

After thoroughly examining Amazon.com, the following trends can be inferred:

• At 35.73, the stock's Price to Earnings ratio is 0.76x less than the industry average, suggesting favorable growth potential.

• With a Price to Book ratio of 7.61, 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 3.63, which is 2.04x the industry average, the stock might be considered overvalued based on sales performance.

• With a Return on Equity (ROE) of 5.79% that is 1.13% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $36.48 Billion, which is 8.77x above the industry average, implying stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $78.69 Billion, which indicates 5.17x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• With a revenue growth of 8.62%, which surpasses the industry average of 7.72%, 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 has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.44.

• 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 Amazon.com, the PE ratio is low compared to its peers in the Broadline Retail industry, indicating potential undervaluation. The high PB and PS ratios suggest that the market values Amazon.com's assets and sales highly. In terms of ROE, EBITDA, gross profit, and revenue growth, Amazon.com outperforms its industry peers, reflecting strong financial performance and growth potential.

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