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 (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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Amazon.com Inc | 45.61 | 8.66 | 3.68 | 6.19% | $32.08 | $31.0 | 11.04% |
| Alibaba Group Holding Ltd | 17.70 | 1.56 | 1.60 | 4.64% | $54.02 | $92.47 | 5.21% |
| PDD Holdings Inc | 9.74 | 3.57 | 2.83 | 9.38% | $29.18 | $59.65 | 44.33% |
| MercadoLibre Inc | 68.45 | 24.44 | 5.35 | 10.37% | $0.72 | $2.44 | 35.27% |
| JD.com Inc | 11.98 | 1.71 | 0.38 | 5.22% | $15.92 | $45.04 | 5.12% |
| Coupang Inc | 42.05 | 10.27 | 1.49 | 1.74% | $0.28 | $2.27 | 27.2% |
| eBay Inc | 15.85 | 5.56 | 3.13 | 11.59% | $0.95 | $1.85 | 3.04% |
| MINISO Group Holding Ltd | 25.27 | 5.97 | 4.12 | 6.68% | $0.88 | $2.03 | 19.29% |
| Vipshop Holdings Ltd | 6.63 | 1.38 | 0.50 | 2.76% | $1.47 | $4.96 | -9.18% |
| Dillard's Inc | 11.41 | 3.58 | 1.07 | 6.37% | $0.15 | $0.58 | -4.19% |
| Ollie's Bargain Outlet Holdings Inc | 29.67 | 3.75 | 2.72 | 3.14% | $0.08 | $0.22 | 12.41% |
| Macy's Inc | 25.35 | 1.06 | 0.20 | 3.53% | $0.44 | $2.16 | -3.48% |
| Nordstrom Inc | 14.67 | 3.87 | 0.26 | 4.75% | $0.4 | $1.49 | -11.04% |
| Kohl's Corp | 6.87 | 0.45 | 0.10 | 0.58% | $0.35 | $1.6 | -0.59% |
| Savers Value Village Inc | 20.46 | 3.48 | 1.03 | 5.09% | $0.07 | $0.22 | 0.53% |
| Groupon Inc | 13.78 | 9.46 | 0.71 | 34.72% | $0.03 | $0.1 | -9.48% |
| Average | 21.33 | 5.34 | 1.7 | 7.37% | $7.0 | $14.47 | 7.63% |
By closely studying Amazon.com, we can observe the following trends:
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At 45.61, the stock's Price to Earnings ratio significantly exceeds the industry average by 2.14x, suggesting a premium valuation relative to industry peers.
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The elevated Price to Book ratio of 8.66 relative to the industry average by 1.62x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 3.68, surpassing the industry average by 2.16x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a lower Return on Equity (ROE) of 6.19%, which is 1.18% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion, which is 4.58x above the industry average, indicating stronger profitability and robust cash flow generation.
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The gross profit of $31.0 Billion is 2.14x above that of its industry, highlighting 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 7.63%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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 terms of the Debt-to-Equity ratio, Amazon.com can be assessed by comparing it to its top 4 peers, resulting in 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.
