Zalando (ZAL) AI Stock Analysis

• Market Cap: €6.32B
• Dividend Yield: N/A
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 26.2
• Beta (1Y): 1.18
• Revenue Growth: 12.06%
• EPS Growth: 18.20%
• Country: DE
• Employees: 15,463
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): 0.06
• Shares Outstanding: 264,181,980
• 10 Day Avg. Volume: 1,116,364
• 30 Day Avg. Volume: 1,158,094
• PEG Ratio: 0.16
• Price to Book (P/B): 3.15
• Price to Sales (P/S): 0.79
• P/FCF Ratio: 18.76
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €36.79
• Price Target Upside: 51.15% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 63 Neutral
• Price Target: €27.00 ▲(10.93% Upside)

Zalando's overall stock score is driven primarily by its strong financial performance, which reflects healthy profitability and growth. However, technical analysis indicates potential bearish trends, and the valuation suggests the stock may be overvalued. The absence of earnings call data and corporate events means these factors do not influence the score.

Positive Factors

High gross margin

A 40.66% gross margin indicates durable pricing power and category mix benefits that support gross profit resilience. High product margins give Zalando room to fund logistics, marketing and technology investments while maintaining competitiveness across Europe over the medium term.

Improving cash generation

Strong FCF growth and an operating cash flow to net income ratio of 2.53 show improving cash conversion and operational cash quality. This enhances flexibility to invest in growth initiatives, service debt and fund marketplace development without relying on external financing.

Diversified digital commerce model

A multi‑stream revenue model (direct retail, marketplace commissions, advertising) and leading European online position create network effects and scale advantages. Diversification reduces single‑channel risk and supports durable gross merchandise expansion and brand partnerships.

Negative Factors

Low net profitability

A thin net margin (2.47%) limits retained earnings and reduces buffers against demand shocks or margin pressure. Coupled with modest revenue growth, this constrains long‑term return on investment and the ability to fund aggressive expansion or generous shareholder returns from operating earnings.

Moderate leverage and limited equity cushion

A D/E of 0.60 and equity ratio near 31% reflect moderate reliance on debt financing. In economic downturns or if margins compress, this leverage could limit financial flexibility, increase interest burden and constrain strategic investments without raising additional capital.

Suboptimal FCF conversion vs. earnings

FCF conversion of 0.57 means a significant portion of accounting profits do not become free cash. Persistent conversion shortfalls signal working capital or capex needs that can limit the company's ability to self‑fund growth, dividends or debt reduction over the medium term.

Zalando Business Overview & Revenue Model

Company Description

Zalando SE operates an online platform for fashion and lifestyle products. It provides clothing, footwear, accessories, and beauty products with free delivery and returns. The company also sells its products through its Zalando Lounge; and brick-and-mortar outlet stores in Berlin, Frankfurt, Cologne, Leipzig, Hamburg, Hanover, Münster, Stuttgart, Mannheim, and Ulm. It serves customers in 23 countries, including Austria, Belgium, Croatia, Czechia, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom. The company was founded in 2008 and is headquartered in Berlin, Germany.

How the Company Makes Money

Zalando generates revenue primarily through its online sales of fashion and lifestyle products. The company's revenue model consists of several key streams: direct sales, where Zalando buys inventory from brands and sells it to consumers; marketplace sales, which allow third-party sellers to list their products on Zalando's platform, earning a commission on each sale; and advertising revenue from brands that promote their products on Zalando's site. Additionally, Zalando has formed strategic partnerships with various fashion brands and retailers, enhancing its product offerings and driving traffic to its platform. The company's focus on customer experience, fast delivery, and return policies also contribute to customer loyalty and repeat purchases, further boosting its earnings.

Zalando Financial Statement Overview

Summary

Zalando's financial performance is strong, with solid profitability and revenue growth. The income statement shows healthy margins and stable operational management. The balance sheet indicates a balanced debt approach, though there is moderate reliance on debt. Cash flow is robust, but there is room for improvement in free cash flow conversion.

Income Statement

Zalando's income statement shows a solid performance with a gross profit margin of 40.66% and a net profit margin of 2.47% for TTM, indicating healthy profitability. The revenue growth rate of 5.78% in TTM suggests a positive growth trajectory, although it has slowed compared to previous years. The EBIT and EBITDA margins are stable at 4.38% and 7.68% respectively, reflecting efficient operational management.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 0.60, which indicates a balanced approach to leveraging. The return on equity (ROE) of 10.17% in TTM is commendable, showing effective use of equity to generate profits. However, the equity ratio of 31.47% suggests a moderate reliance on debt financing, which could pose risks if not managed carefully.

Cash Flow

Cash flow analysis shows a strong free cash flow growth rate of 67.00% in TTM, highlighting improved cash generation capabilities. The operating cash flow to net income ratio of 2.53 indicates robust cash flow relative to net income. However, the free cash flow to net income ratio of 0.57 suggests that while cash flow is strong, there is room for improvement in converting net income to free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	11.57B	10.57B	10.14B	10.34B	10.35B	7.98B
Gross Profit	4.67B	4.30B	3.68B	4.06B	4.33B	3.39B
EBITDA	838.60M	811.30M	572.50M	395.30M	660.20M	596.20M
Net Income	241.30M	251.10M	83.00M	16.80M	234.50M	226.10M
Balance Sheet
Total Assets	9.00B	7.98B	8.11B	7.63B	6.90B	6.49B
Cash, Cash Equivalents and Short-Term Investments	1.44B	2.69B	2.62B	2.04B	2.29B	2.69B
Total Debt	1.44B	1.73B	1.85B	1.72B	1.57B	1.77B
Total Liabilities	6.13B	5.32B	5.73B	5.43B	4.68B	4.34B
Stockholders Equity	2.83B	2.67B	2.37B	2.20B	2.22B	2.15B
Cash Flow
Free Cash Flow	397.30M	447.30M	686.30M	108.30M	283.30M	277.30M
Operating Cash Flow	610.80M	654.10M	949.50M	459.90M	616.20M	527.40M
Investing Cash Flow	-1.14B	-269.80M	-320.70M	-476.20M	-335.90M	-217.80M
Financing Cash Flow	-545.20M	-325.60M	-123.60M	-245.90M	-639.80M	1.35B

Zalando Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.34
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:ZAL, the sentiment is Negative. The current price of 24.34 is below the 20-day moving average (MA) of 24.83, above the 50-day MA of 24.23, and below the 200-day MA of 26.49, indicating a neutral trend. The MACD of -0.12 indicates Positive momentum. The RSI at 47.54 is Neutral, neither overbought nor oversold. The STOCH value of 38.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:ZAL.

Zalando Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TNIE	79 Outperform	€1.31B	42.52	8.50%	―	29.34%	―
ZAL	63 Neutral	€6.32B	26.19	9.04%	―	12.06%	18.20%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
AG1	47 Neutral	€6.16B	76.77	11.87%	―	31.25%	―
MRX	44 Neutral	€44.76M	-0.65	-75.59%	―	-16.95%	-24.45%
KTA	43 Neutral	€132.83M	-1.89	-54.18%	23.02%	-25.17%	-487.87%