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 | 46.62 | 8.85 | 3.76 | 6.19% | $32.08 | $31.0 | 11.04% |
| Alibaba Group Holding Ltd | 17.58 | 1.55 | 1.59 | 4.64% | $54.02 | $92.47 | 5.21% |
| PDD Holdings Inc | 9.78 | 3.59 | 2.84 | 9.38% | $29.18 | $59.65 | 44.33% |
| MercadoLibre Inc | 70.50 | 25.18 | 5.51 | 10.37% | $0.72 | $2.44 | 35.27% |
| JD.com Inc | 11.56 | 1.65 | 0.36 | 5.22% | $15.92 | $45.04 | 5.12% |
| Coupang Inc | 41.96 | 10.25 | 1.49 | 1.74% | $0.28 | $2.27 | 27.2% |
| eBay Inc | 15.95 | 5.60 | 3.15 | 11.59% | $0.95 | $1.85 | 3.04% |
| MINISO Group Holding Ltd | 23.94 | 5.65 | 3.90 | 6.68% | $0.88 | $2.03 | 19.29% |
| Vipshop Holdings Ltd | 6.36 | 1.32 | 0.48 | 2.76% | $1.47 | $4.96 | -9.18% |
| Dillard's Inc | 11.47 | 3.60 | 1.08 | 6.37% | $0.15 | $0.58 | -4.19% |
| Ollie's Bargain Outlet Holdings Inc | 30.58 | 3.87 | 2.80 | 3.14% | $0.08 | $0.22 | 12.41% |
| Macy's Inc | 25.75 | 1.08 | 0.20 | 3.53% | $0.44 | $2.16 | -3.48% |
| Nordstrom Inc | 15.18 | 4.01 | 0.27 | 4.75% | $0.4 | $1.49 | -11.04% |
| Kohl's Corp | 6.89 | 0.45 | 0.10 | 0.58% | $0.35 | $1.6 | -0.59% |
| Savers Value Village Inc | 20.98 | 3.56 | 1.06 | 5.09% | $0.07 | $0.22 | 0.53% |
| Groupon Inc | 16.33 | 11.21 | 0.84 | 34.72% | $0.03 | $0.1 | -9.48% |
| Average | 21.65 | 5.5 | 1.71 | 7.37% | $7.0 | $14.47 | 7.63% |
By analyzing Amazon.com, we can infer the following trends:
-
Notably, the current Price to Earnings ratio for this stock, 46.62, is 2.15x above the industry norm, reflecting a higher valuation relative to the industry.
-
With a Price to Book ratio of 8.85, which is 1.61x 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 stock's relatively high Price to Sales ratio of 3.76, surpassing the industry average by 2.2x, may indicate an aspect of overvaluation in terms of sales performance.
-
With a Return on Equity (ROE) of 6.19% that is 1.18% 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 $32.08 Billion, which is 4.58x 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 $31.0 Billion, which indicates 2.14x above the industry average, indicating stronger profitability and higher earnings from its core operations.
-
With a revenue growth of 11.04%, which surpasses the industry average of 7.63%, the company is demonstrating robust sales expansion and gaining market share.
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.
In terms of the Debt-to-Equity ratio, Amazon.com stands in comparison with its top 4 peers, leading to the following comparisons:
-
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 0.52.
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 strong 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 within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
