In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Amazon.com (NASDAQ:AMZN) in relation to its major competitors in the Broadline Retail industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company’s performance within 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 | 33.35 | 6.84 | 3.10 | 7.34% | $38.55 | $88.9 | 10.49% |
| Alibaba Group Holding Ltd | 17.48 | 2.08 | 2.17 | 5.01% | $59.0 | $117.63 | 7.61% |
| PDD Holdings Inc | 10.13 | 3.49 | 2.89 | 9.28% | $32.41 | $62.81 | 24.45% |
| MercadoLibre Inc | 61.84 | 27.16 | 5.69 | 15.3% | $0.96 | $2.75 | 37.42% |
| JD.com Inc | 8.86 | 1.44 | 0.32 | 4.21% | $12.54 | $53.12 | 13.37% |
| Coupang Inc | 292.12 | 10.34 | 1.41 | 3.76% | $0.44 | $2.49 | 21.4% |
| eBay Inc | 17.26 | 6.16 | 3.32 | 12.84% | $0.76 | $1.86 | 0.66% |
| Vipshop Holdings Ltd | 6.92 | 1.28 | 0.49 | 6.31% | $3.29 | $7.63 | -4.18% |
| Ollie’s Bargain Outlet Holdings Inc | 32.85 | 3.83 | 2.89 | 4.14% | $0.1 | $0.27 | 2.79% |
| MINISO Group Holding Ltd | 15.66 | 3.91 | 2.41 | 8.12% | $0.99 | $2.22 | 22.68% |
| Dillard’s Inc | 9.41 | 3.03 | 0.85 | 11.4% | $0.31 | $0.74 | -4.97% |
| Nordstrom Inc | 13.87 | 3.54 | 0.27 | 15.61% | $0.44 | $1.69 | -2.17% |
| Macy’s Inc | 5.52 | 0.70 | 0.14 | 7.86% | $0.68 | $3.02 | -4.39% |
| Savers Value Village Inc | 56.41 | 3.59 | 1.04 | -0.44% | $0.04 | $0.22 | 5.02% |
| Kohl’s Corp | 6.84 | 0.20 | 0.05 | 1.26% | $0.31 | $1.92 | -9.39% |
| Hour Loop Inc | 64 | 8.72 | 0.33 | -25.78% | $-0.0 | $0.02 | -8.51% |
| Average | 41.28 | 5.3 | 1.62 | 5.26% | $7.48 | $17.23 | 6.79% |
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By conducting a comprehensive analysis of Amazon.com, the following trends become evident:
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The Price to Earnings ratio of 33.35 is 0.81x lower than the industry average, indicating potential undervaluation for the stock.
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With a Price to Book ratio of 6.84, which is 1.29x 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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The stock’s relatively high Price to Sales ratio of 3.1, surpassing the industry average by 1.91x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 7.34% that is 2.08% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.55 Billion, which is 5.15x above the industry average, indicating stronger profitability and robust cash flow generation.
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The company has higher gross profit of $88.9 Billion, which indicates 5.16x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company’s revenue growth of 10.49% is notably higher compared to the industry average of 6.79%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its 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.
When assessing Amazon.com against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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Amazon.com has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.46.
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This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
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, gross profit, and revenue growth outperform its industry peers, reflecting strong financial performance and growth potential.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.