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 | 44.41 | 8.43 | 3.58 | 6.19% | $32.08 | $31.0 | 11.04% |
| Alibaba Group Holding Ltd | 17.52 | 1.54 | 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 | 74.85 | 26.73 | 5.85 | 10.37% | $0.72 | $2.44 | 35.27% |
| JD.com Inc | 11.36 | 1.62 | 0.36 | 5.22% | $15.92 | $45.04 | 5.12% |
| Coupang Inc | 44.31 | 10.83 | 1.57 | 1.74% | $0.28 | $2.27 | 27.2% |
| eBay Inc | 16.40 | 5.75 | 3.24 | 11.59% | $0.95 | $1.85 | 3.04% |
| Dillard's Inc | 11.61 | 3.64 | 1.09 | 6.37% | $0.15 | $0.58 | -4.19% |
| Vipshop Holdings Ltd | 6.26 | 1.30 | 0.47 | 2.76% | $1.47 | $4.96 | -9.18% |
| Ollie's Bargain Outlet Holdings Inc | 30.76 | 3.89 | 2.82 | 3.14% | $0.08 | $0.22 | 12.41% |
| MINISO Group Holding Ltd | 17.50 | 4.06 | 2.85 | 6.26% | $0.79 | $1.77 | 24.08% |
| Macy's Inc | 24.45 | 1.02 | 0.19 | 3.53% | $0.44 | $2.16 | -3.48% |
| Nordstrom Inc | 14.23 | 4.26 | 0.27 | 13.68% | $0.4 | $1.49 | 3.23% |
| Kohl's Corp | 6.86 | 0.45 | 0.10 | 1.73% | $0.35 | $1.6 | -4.18% |
| Savers Value Village Inc | 20.54 | 3.49 | 1.04 | 5.09% | $0.07 | $0.22 | 0.53% |
| Groupon Inc | 13.25 | 9.09 | 0.68 | 34.72% | $0.03 | $0.1 | -9.48% |
| Average | 21.31 | 5.42 | 1.66 | 8.01% | $6.99 | $14.45 | 8.66% |
When analyzing Amazon.com, the following trends become evident:
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Notably, the current Price to Earnings ratio for this stock, 44.41, is 2.08x above the industry norm, reflecting a higher valuation relative to the industry.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 8.43 which exceeds the industry average by 1.56x.
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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 company has a lower Return on Equity (ROE) of 6.19%, which is 1.82% 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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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.08 Billion, which is 4.59x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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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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With a revenue growth of 11.04%, which surpasses the industry average of 8.66%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 examining Amazon.com in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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Amazon.com demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.52, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
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 and financial metrics compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
