Industry Comparison: Evaluating Amazon.com Against Competitors In Broadline Retail Industry

In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating Amazon.com (NASDAQ: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.

Amazon.com Background

Amazon is the leading online retailer and marketplace for third party sellers. Retail related revenue represents approximately 74% of total, followed by Amazon Web Services (17%), and advertising services (9%). International segments constitute 22% of Amazon's total revenue, led by Germany, the United Kingdom, and Japan.

By closely studying Amazon.com, we can observe the following trends:

• At 31.43, the stock's Price to Earnings ratio is 0.33x less than the industry average, suggesting favorable growth potential.

• With a Price to Book ratio of 6.44, which is 1.21x 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.

• The Price to Sales ratio of 3.48, which is 1.55x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a higher Return on Equity (ROE) of 6.02%, which is 1.78% 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 $45.5 Billion, which is 10.46x above the industry average, indicating stronger profitability and robust cash flow generation.

• Compared to its industry, the company has higher gross profit of $91.5 Billion, which indicates 5.93x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company is witnessing a substantial decline in revenue growth, with a rate of 13.4% compared to the industry average of 14.41%, which indicates a challenging sales environment.

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.

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

• Amazon.com exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.37.

• This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

For Amazon.com in the Broadline Retail industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry peers. In terms of ROE, EBITDA, and gross profit, Amazon.com demonstrates strong performance compared to industry peers. However, revenue growth is relatively low, which may impact future valuation compared to competitors in the sector.

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