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 (NASDAQ: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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Amazon.com Inc | 44.42 | 8.44 | 3.58 | 6.19% | $32.08 | $31.0 | 11.04% |
| Alibaba Group Holding Ltd | 17.99 | 1.58 | 1.63 | 4.64% | $54.02 | $92.47 | 5.21% |
| PDD Holdings Inc | 9.52 | 3.49 | 2.77 | 9.38% | $29.18 | $59.65 | 44.33% |
| MercadoLibre Inc | 70.42 | 25.15 | 5.50 | 10.37% | $0.72 | $2.44 | 35.27% |
| JD.com Inc | 12.03 | 1.72 | 0.38 | 5.22% | $15.92 | $45.04 | 5.12% |
| Coupang Inc | 44.58 | 10.89 | 1.58 | 1.74% | $0.28 | $2.27 | 27.2% |
| eBay Inc | 15.94 | 5.59 | 3.15 | 11.59% | $0.95 | $1.85 | 3.04% |
| Vipshop Holdings Ltd | 6.59 | 1.37 | 0.49 | 2.76% | $1.47 | $4.96 | -9.18% |
| Dillard's Inc | 11.43 | 3.59 | 1.07 | 6.37% | $0.15 | $0.58 | -4.19% |
| MINISO Group Holding Ltd | 20.14 | 4.67 | 3.28 | 6.26% | $0.79 | $1.77 | 24.08% |
| Ollie's Bargain Outlet Holdings Inc | 30.17 | 3.82 | 2.76 | 3.14% | $0.08 | $0.22 | 12.41% |
| Macy's Inc | 24.98 | 1.05 | 0.19 | 3.53% | $0.44 | $2.16 | -3.48% |
| Nordstrom Inc | 14.37 | 3.79 | 0.25 | 4.75% | $0.4 | $1.49 | -11.04% |
| Kohl's Corp | 6.74 | 0.44 | 0.10 | 0.58% | $0.35 | $1.6 | -0.59% |
| Savers Value Village Inc | 20.33 | 3.45 | 1.03 | 5.09% | $0.07 | $0.22 | 0.53% |
| Groupon Inc | 13.59 | 9.33 | 0.70 | 34.72% | $0.03 | $0.1 | -9.48% |
| Average | 21.25 | 5.33 | 1.66 | 7.34% | $6.99 | $14.45 | 7.95% |
By thoroughly analyzing Amazon.com, we can discern the following trends:
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At 44.42, the stock's Price to Earnings ratio significantly exceeds the industry average by 2.09x, suggesting a premium valuation relative to industry peers.
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With a Price to Book ratio of 8.44, which is 1.58x 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.
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With a relatively high Price to Sales ratio of 3.58, which is 2.16x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 6.19% is 1.15% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion, which is 4.59x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $31.0 Billion, which indicates 2.15x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 11.04% exceeds the industry average of 7.95%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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 considering the Debt-to-Equity ratio, Amazon.com can be compared to its top 4 peers, leading to the following observations:
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Amazon.com is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.52.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For Amazon.com, the PE, PB, and PS ratios are all high compared to its peers in the Broadline Retail industry, indicating that the stock may be overvalued. The low ROE suggests that Amazon.com is not generating significant returns on shareholder equity. However, the high EBITDA, gross profit, and revenue growth show that the company is performing well in terms of operational efficiency and revenue generation compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
