In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Amazon.com (NASDAQ:AMZN) in relation to its major competitors in the Broadline Retail industry. By closely examining key financial metrics, market standing, and growth prospects, our objective 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 74% of total, followed by Amazon Web Services (17%), and advertising services (9%). International segments constitute 22% of Amazon's total revenue, 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 | 34.79 | 7.12 | 3.85 | 6.02% | $45.5 | $91.5 | 13.4% |
| Alibaba Group Holding Ltd | 20.66 | 2.50 | 2.56 | 2.05% | $27.26 | $97.01 | 4.77% |
| PDD Holdings Inc | 12.35 | 3.09 | 3.02 | 7.79% | $25.03 | $61.44 | 8.98% |
| MercadoLibre Inc | 53.20 | 17.77 | 4.22 | 7.06% | $0.88 | $3.21 | 39.48% |
| Sea Ltd | 58.58 | 7.79 | 4.03 | 3.77% | $0.48 | $2.6 | 38.3% |
| JD.com Inc | 9.77 | 1.27 | 0.24 | 2.3% | $7.36 | $50.47 | 14.85% |
| eBay Inc | 20.15 | 8.70 | 4.02 | 13.35% | $0.74 | $2.0 | 9.47% |
| Coupang Inc | 106.90 | 8.65 | 1.25 | 2.02% | $0.32 | $2.72 | 17.81% |
| Dillard's Inc | 18.77 | 5.27 | 1.64 | 6.55% | $0.21 | $0.66 | 2.74% |
| Vipshop Holdings Ltd | 9.64 | 1.57 | 0.63 | 3.06% | $1.55 | $4.91 | 3.36% |
| Ollie's Bargain Outlet Holdings Inc | 31.17 | 3.77 | 2.74 | 2.55% | $0.08 | $0.25 | 18.59% |
| Global E Online Ltd | 1012.50 | 7.37 | 7.93 | 1.43% | $0.02 | $0.1 | 25.46% |
| Macy's Inc | 13.95 | 1.46 | 0.29 | 0.25% | $0.27 | $2.06 | 0.2% |
| MINISO Group Holding Ltd | 19.78 | 3.89 | 2.14 | 4.08% | $0.79 | $2.59 | 28.17% |
| Kohl's Corp | 12.58 | 0.62 | 0.16 | 0.2% | $0.25 | $1.52 | -3.64% |
| Hour Loop Inc | 61.33 | 8.44 | 0.46 | 7.15% | $0.0 | $0.02 | 7.56% |
| Average | 97.42 | 5.48 | 2.36 | 4.24% | $4.35 | $15.44 | 14.41% |
Upon analyzing Amazon.com, the following trends can be observed:
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The Price to Earnings ratio of 34.79 is 0.36x lower than the industry average, indicating potential undervaluation for the stock.
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With a Price to Book ratio of 7.12, which is 1.3x 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 3.85, which is 1.63x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 6.02% is 1.78% above the industry average, highlighting efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $45.5 Billion is 10.46x above the industry average, highlighting stronger profitability and robust cash flow generation.
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With higher gross profit of $91.5 Billion, which indicates 5.93x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company is witnessing a substantial decline in revenue growth, with a rate of 13.4% compared to the industry average of 14.41%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 evaluating Amazon.com against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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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.
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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 0.37.
Key Takeaways
For Amazon.com, the PE ratio is low compared to its peers in the Broadline Retail industry, indicating potential undervaluation. The high PB and PS ratios suggest that the market values Amazon.com's assets and sales highly. Amazon.com's high ROE, EBITDA, and gross profit reflect strong profitability and operational efficiency. However, the low revenue growth rate may raise concerns about future performance compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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