Zalando (ZAL) AI Stock Analysis

• Market Cap: €4.97B
• Dividend Yield: N/A
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 20.6
• Beta (1Y): 1.17
• 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: €32.75
• Price Target Upside: 70.93% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): 1.55
• Revenue Forecast (FY): €14.04B

• Rating: 61 Neutral
• Price Target: €22.50 ▲(17.43% Upside)
• Action: Reiterated Date: 02/04/26
• Date: Action: Reiterated 02/04/26

The score is supported mainly by solid financial performance (healthy margins, moderate leverage, and improving cash generation), but is held back by weak technicals with the stock trading below all major moving averages and negative MACD. Valuation is neither clearly cheap nor expensive based on the provided P/E, and no dividend yield data is available to add support.

Positive Factors

Strong gross and operating margins

Sustained gross margin above 40% with stable EBIT/EBITDA margins indicates durable unit economics in fashion retail. This margin buffer supports marketing, logistics and tech investment, helping preserve competitiveness and profitability across economic cycles.

Improving cash generation

A 67% rise in free cash flow and operating cash flow well above net income signal stronger cash conversion and liquidity. Improved cash generation enables reinvestment in growth, reduces refinancing needs, and enhances resilience to market shocks over the medium term.

Diversified revenue model (direct, marketplace, advertising)

A multi‑stream model (inventory sales, third‑party marketplace commissions and advertising) offers higher-margin, asset‑light revenue expansion and reduces dependence on any single channel. This structural mix supports scalable growth and margin improvement over time.

Negative Factors

Low net margin despite high gross margin

Wide gap between gross and net margins suggests significant operating, marketing or fulfillment costs compressing bottom‑line profitability. Low net margins limit retained earnings, slow balance sheet strengthening, and reduce cushion against competitive or macro pressures.

Moderate leverage and limited equity cushion

A debt/equity of 0.60 and modest equity ratio indicate reliance on external financing. While manageable today, this structure reduces financial flexibility, raises interest and refinancing exposure, and constrains capital allocation during downturns or heavier investment cycles.

Slowing revenue growth rate

Slower top‑line growth reduces operating leverage and the pace at which unit economics can improve. In a competitive European fashion market, muted revenue growth raises risk that margin gains or scale benefits may be harder to sustain without stronger SKU expansion or marketplace adoption.

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

Financial statements indicate solid operating health: strong gross margin (40.66%) and stable EBIT/EBITDA margins (4.38%/7.68%), with positive TTM revenue growth (5.78%). Balance sheet leverage is moderate (debt-to-equity 0.60) and ROE is healthy (10.17%), while cash flow is improving (FCF growth 67%) but FCF conversion vs. net income is weaker (FCF/NI 0.57).

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: 19.16
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• 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 19.16 is below the 20-day moving average (MA) of 21.00, below the 50-day MA of 23.35, and below the 200-day MA of 25.32, indicating a bearish trend. The MACD of -0.86 indicates Negative momentum. The RSI at 33.68 is Neutral, neither overbought nor oversold. The STOCH value of 30.69 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	€1.40B	45.23	8.50%	―	29.34%	―
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
ZAL	61 Neutral	€4.97B	20.62	9.04%	―	12.06%	18.20%
AG1	47 Neutral	$3.46B	43.12	11.87%	―	31.25%	―
MRX	44 Neutral	€42.72M	-0.62	-75.59%	―	-16.95%	-24.45%
KTA	43 Neutral	€129.72M	-1.85	-54.18%	23.02%	-25.17%	-487.87%