Competitor Analysis: Evaluating Amazon.com And Competitors In Broadline Retail Industry

Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Amazon.com (NASDAQ: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 35.3 significantly below the industry average by 0.93x suggests undervaluation. This can make the stock appealing for those seeking growth.

• The elevated Price to Book ratio of 7.4 relative to the industry average by 1.25x suggests company might be overvalued based on its book value.

• The Price to Sales ratio of 3.72, which is 1.71x 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 5.68% is 0.46% above the industry average, highlighting efficient use of equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $36.6 Billion, which is 8.99x above the industry average, indicating stronger profitability and robust cash flow generation.

• With higher gross profit of $86.89 Billion, which indicates 5.71x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• With a revenue growth of 13.33%, which surpasses the industry average of 11.79%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

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.

By evaluating Amazon.com against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:

• When considering the debt-to-equity ratio, Amazon.com exhibits a stronger financial position compared to its top 4 peers.

• This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.4, which can be perceived as a positive aspect by 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 the company's assets and sales more highly. Amazon.com's high ROE, EBITDA, gross profit, and revenue growth reflect strong financial performance relative to industry peers.

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