Understanding Amazon.com's Position In Broadline Retail Industry Compared To Competitors
Amazon.com is evaluated against competitors in the Broadline Retail industry, revealing a Price to Earnings (P/E) ratio of 34.41, indicating growth potential. However, its Price to Book (P/B) and Price to Sales (P/S) ratios suggest overvaluation. The Return on Equity (ROE) is slightly below average, while EBITDA and gross profit margins are significantly higher than peers, showcasing strong operational performance. Despite a decline in revenue growth at 10.49%, Amazon maintains a favorable debt-to-equity ratio of 0.46, indicating a strong financial position.
Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Amazon.com 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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Amazon.com Inc | 34.41 | 7.05 | 3.20 | 7.34% | $38.55 | $37.37 | 10.49% |
| Alibaba Group Holding Ltd | 19.27 | 2.28 | 2.39 | 5.01% | $59.0 | $117.63 | 7.61% |
| PDD Holdings Inc | 11.31 | 3.81 | 3.23 | 9.28% | $29.18 | $59.65 | 11.33% |
| MercadoLibre Inc | 51.76 | 22.73 | 4.76 | 15.3% | $0.96 | $2.75 | 37.42% |
| JD.com Inc | 11.12 | 1.81 | 0.40 | 4.21% | $15.92 | $45.04 | 33.26% |
| Coupang Inc | 274.12 | 9.65 | 1.32 | 3.76% | $0.44 | $2.49 | 21.4% |
| eBay Inc | 17.15 | 6.12 | 3.30 | 12.84% | $0.76 | $1.86 | 0.66% |
| Vipshop Holdings Ltd | 7.94 | 1.47 | 0.57 | 6.31% | $1.47 | $4.96 | 60.69% |
| Ollie's Bargain Outlet Holdings Inc | 36.05 | 4.21 | 3.17 | 4.14% | $0.1 | $0.27 | 2.79% |
| MINISO Group Holding Ltd | 15.99 | 4.02 | 2.46 | 8.12% | $0.88 | $2.03 | 4.2% |
| Dillard's Inc | 9.73 | 3.17 | 0.88 | 11.4% | $0.31 | $0.74 | -4.97% |
| Nordstrom Inc | 14.05 | 3.58 | 0.28 | 15.61% | $0.44 | $1.69 | -2.17% |
| Macy's Inc | 6.07 | 0.77 | 0.15 | 7.86% | $0.68 | $3.02 | -4.39% |
| Savers Value Village Inc | 40.59 | 2.60 | 0.75 | -0.44% | $0.04 | $0.22 | 5.02% |
| Kohl's Corp | 8.35 | 0.24 | 0.06 | 1.26% | $0.31 | $1.92 | -9.39% |
| Hour Loop Inc | 29.80 | 7.83 | 0.36 | 7.3% | $0.0 | $0.02 | 6.6% |
| Average | 36.89 | 4.95 | 1.61 | 7.46% | $7.37 | $16.29 | 11.34% |
When analyzing Amazon.com, the following trends become evident:
With a Price to Earnings ratio of 34.41, which is 0.93x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 7.05 which exceeds the industry average by 1.42x.
With a relatively high Price to Sales ratio of 3.2, which is 1.99x the industry average, the stock might be considered overvalued based on sales performance.
With a Return on Equity (ROE) of 7.34% that is 0.12% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.23x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
Compared to its industry, the company has higher gross profit of $37.37 Billion, which indicates 2.29x 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 10.49% compared to the industry average of 11.34%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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 0.46.
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 standards. In terms of ROE, Amazon.com shows lower profitability compared to peers. However, its high EBITDA and gross profit margins indicate strong operational performance. The low revenue growth rate may pose a challenge for Amazon.com in the competitive industry landscape.
This article was generated by Benzinga's automated content engine and reviewed by an editor.