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Prada (PRDSY)
OTHER OTC:PRDSY
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Prada
(OTC:PRDSY)
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Rating:68Neutral
Price Target:
$11.50
▲(5.12% Upside)
Action:ReiteratedDate:03/07/26
The score is driven primarily by strong underlying profitability and generally solid cash generation, tempered by higher leverage and signs of slowing momentum. Technicals remain weak with the stock below major moving averages despite neutral momentum signals. Valuation is reasonable (moderate P/E and a supportive dividend), while the earnings call reinforced growth drivers but flagged meaningful near-term FX and Versace integration headwinds.
Positive Factors
High margins and profitability
Prada’s consistently strong gross and operating margins reflect durable pricing power, brand exclusivity and tight cost control. High margins support sustained cash generation and reinvestment capacity, buffering the business against cyclical demand swings and preserving long‑term profitability.
Brand strength and retail momentum (Miu Miu)
Rapid Miu Miu growth and rising contribution diversify Prada’s revenue base toward a younger, high‑growth segment. Strong full‑price retail momentum underpins durable top‑line resilience, supports higher margin sales mix, and reduces dependence on wholesale or discounting over the medium term.
Improving cash generation and FCF
Material FCF improvement signals stronger cash conversion and funding capacity for capex, digital investment and dividends. Positive operating cash flow and higher FCF enhance financial flexibility to absorb strategic spend (store upgrades, tech, M&A) without chronic reliance on external financing.
Negative Factors
Higher leverage after 2025
The marked step‑up in leverage reduces financial flexibility and raises refinancing and interest‑rate risk. Elevated net debt limits the company’s ability to fund opportunistic investments or weather prolonged demand weakness without pressuring cash flow or forcing slower deleveraging.
Versace integration dilution and execution risk
Acquiring Versace creates near‑term top‑line and margin dilution and requires channel repositioning and cost integration. Execution risk and short‑term profit pressure could divert management focus and capital, delaying expected synergies and constraining margin expansion through 2026.
Significant FX headwinds
Persistent currency headwinds materially reduce reported growth and complicate planning across geographies. FX pressure can compress margins, mask underlying organic momentum, and increase volatility in multi‑year targets, forcing hedging costs or local pricing moves that may affect demand.
Prada (PRDSY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.64B
Dividend Yield1.72%
Average Volume (3M)1.91K
Price to Earnings (P/E)15.3
Beta (1Y)0.69
Revenue Growth12.12%
EPS Growth12.85%
CountryUS
Employees15,216
SectorConsumer Cyclical
Sector Strength84
IndustryLuxury Goods
Share Statistics
EPS (TTM)0.12
Shares Outstanding1,279,412,000
10 Day Avg. Volume4,013
30 Day Avg. Volume1,905
Financial Highlights & Ratios
PEG Ratio-5.05
Price to Book (P/B)2.70
Price to Sales (P/S)2.28
P/FCF Ratio12.50
Enterprise Value/Market Cap1.16
Enterprise Value/Revenue2.57
Enterprise Value/Gross Profit3.20
Enterprise Value/Ebitda7.78
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.77
Revenue Forecast (FY)$7.60B
Prada Business Overview & Revenue Model
Company DescriptionPrada S.p.A., together with its subsidiaries, designs, produces, and distributes leather goods, handbags, footwear, apparel, and accessories in Europe, the Americas, the Asia Pacific, Japan, the Middle East, and Africa. It offers its products under the Prada, Miu Miu, Church's, and Car Shoe brands. The company also provides eyewear and fragrances under licensing agreements, as well as operates in the food sector under the Marchesi 1824 brand. As of December 31, 2021, it had 635 directly operated stores. The company also sells its products through a network of approximately 26 franchise operated stores; multi-brand stores; luxury department stores; independent retailers; and online retailers. In addition, it engages in the event management and real estate business, as well as operates duty-free stores. The company was founded in 1913 and is headquartered in Milan, Italy. Prada S.p.A. is a subsidiary of Prada Holding S.p.A.
How the Company Makes MoneyPrada generates revenue primarily through the sale of luxury goods across various categories, including leather handbags, footwear, clothing, and accessories. The bulk of its revenue comes from direct retail sales through its extensive network of boutiques and flagship stores located in prime shopping districts worldwide. Additionally, the company benefits from e-commerce sales, which have been a growing segment. Key partnerships with high-end department stores and online luxury retailers also contribute to revenue streams. Seasonal collections and limited-edition products boost sales, while brand exclusivity and high-quality craftsmanship allow for premium pricing, enhancing profit margins. The company's strategic focus on brand expansion in emerging markets further supports its earnings growth.
Prada Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: clear commercial and brand strengths (fifth consecutive year of growth, robust retail momentum, strong Miu Miu performance, disciplined profitability and ESG progress) and a healthy balance sheet, but also notable near‑term challenges (meaningful FX headwinds, Versace integration dilution and planned channel repositioning, regional disruptions and cautious wholesale). Management emphasized continued investment in product, hospitality and digital capabilities while targeting margin resilience and Gradual recovery for Versace from 2027. Given the mix of solid operational results and material near‑term integration/FX headwinds, the tone is cautiously constructive.Q4-2025 Updates
Positive Updates
Group Revenue Growth and Retail Momentum
Net revenues of EUR 5.7 billion, up 9% versus FY24 at constant FX (organic +8% Y/Y). Retail sales totaled EUR 5.1 billion, up 8% organic versus FY24 and up 28% versus FY23 at constant FX. Fourth quarter retail sales grew 6% despite a tough comparison base.
Fifth Consecutive Year of Group Growth
2025 marks the fifth consecutive year of group-level revenue growth, driven primarily by like‑for‑like full-price retail sales, with positive contribution from both average price and full-price volumes.
Strong Brand Performance — Miu Miu
Miu Miu retail sales grew 35% to EUR 1.6 billion (Q4 +20% vs +84% in 2024). Miu Miu increased its contribution to group retail sales to 31% (from 25% in FY24) and the company expects continued growth (management said double digit possible if conditions allow).
Solid Profitability and Operating Efficiency
EBIT adjusted reached EUR 1.32 billion with an adjusted EBITA margin of 23.2% (including one month of Versace); pre‑Versace EBITA margin was steady versus 2024 and improved on a constant currency basis. Gross margin improved by 50 basis points to 8.3% driven by operating leverage and channel mix.
Healthy Cash Position and Balance Sheet
Net debt closed at EUR 466 million after FY25 cash outflows including approximately EUR 617–620 million of CapEx, the EUR 1.2 billion Versace acquisition and EUR 420 million of dividends. Board proposed dividend of EUR 0.166 per share (total EUR 425 million, payout ratio ~50%).
Operational Investments and Digital/AI Upgrades
Continued over‑proportionate investment in people, desirability, store upgrades, digital technology and AI tools while maintaining steady profitability, and management expects CapEx as a percentage of sales to begin declining from FY26.
Geographic and Channel Highlights
All regions reported growth: Asia Pacific +11% (10% organic), Americas +18% (15% organic), Europe +5% (4% organic), Middle East +15%, Japan +3%. Wholesale +4% (3% organic) and royalties +19% (14% organic) supported by eyewear and fragrances.
ESG and Cultural Milestones
Exceeded approved science‑based targets for Scope 1 & 2 emissions; achieved gender equality certification in Italy; launched Ocean Literacy Center in Venice and other sustainability and cultural initiatives demonstrating progress across planet, people and culture pillars.
Negative Updates
Versace Integration Costs and Near‑Term Dilution
Versace acquisition closed Dec 2 and contributed one month of consolidation. Full‑year Versace revenues ~EUR 680 million. Management expects a mid‑single‑digit top‑line contraction at constant FX in 2026 (likely high single‑digit at current FX) due to channel repositioning and rationalization, and an EBIT loss in 2026 limited to a double‑digit figure (i.e., a material negative impact on group results in the near term). Versace is expected to be dilutive to FY26 group margin with recovery targeted from 2027.
Significant FX Headwinds
Exchange rates had a negative 380 basis point impact on revenues in FY25; management expects continued meaningful FX pressure through FY26, reducing reported growth versus constant‑currency performance.
Prada Brand Softness and Regional Headwinds
Prada brand finished FY25 down 1% (but Q4 turned positive). Europe showed softer trends in H2 with lower tourism and high comps. Japan trend mixed; Middle East operations impacted by regional turmoil (some store disruptions in Qatar, Bahrain, Kuwait) — Middle East represents ~5% of sales.
Wholesale and Q4 Channel Drag
Wholesale grew only 4% Y/Y (3% organic) and was -1% organic in Q4 due to a cautious stance on shipments (notably to Saks), temporarily depressing Q4 wholesale performance.
High Investment Base and Elevated CapEx
CapEx in FY25 was substantial at ~EUR 617 million (EUR 535 million excluding real estate), including significant retail and technology investments. Although planned to decline as a percentage of sales in FY26, elevated spend pressured free cash flow in the year when combined with the Versace acquisition and dividends.
Modest Net Income Progress
Net income increased only 2% to EUR 852 million despite double‑digit revenue growth on an organic basis, reflecting increased investments and dilution from acquisition activity.
Industry Structural Challenge
Management noted that the luxury industry has lost roughly 1 consumer out of 5 over the past 3–4 years, highlighting a longer‑term demand challenge that the group must navigate.
Company Guidance
Management reiterated that group momentum will continue into 2026 with "solid" organic growth at Prada and further normalization at Miu Miu (after Miu Miu’s FY retail up 35% to €1.6bn and Q4 +20% vs +84% LY), while flagging a challenging H1 (Miu Miu lapping prior Q1 +60% / Q2 +40% comps) and continued FX pressure similar to 2025 (FX headwind ~380bp on revenues in 2025). Key FY25 baselines: group net revenues €5.7bn (+9% at constant FX; +8% organic), retail sales €5.1bn (+8% organic), EBIT‑adjusted €1.32bn (23.2% margin, pre‑Versace margin steady vs 2024), gross margin +50bp to 8.3%, net income €852m, CapEx €617m (€535m ex real estate) and net debt €466m. On channels, retail drove growth (LFL +8%), wholesale +4% (3% organic) and royalties +19% (14% organic); space contribution remains low single digit and inventory incidence improved from 15% to 14%. Versace (one month consolidated in 2025; ~€680m pro‑forma FY revenue) will be a transition in 2026: management expects a mid‑single‑digit top‑line contraction at constant FX (likely high‑single digit at reported FX), greater discipline on discounting, channel repositioning and cost synergies, and an anticipated EBIT loss limited to a "two‑digit" million figure in 2026 with progressive margin and top‑line improvement targeted from 2027; excluding Versace, management said mid‑single‑digit reported top‑line growth would allow a steady EBIT margin while marketing may tick up slightly and CapEx intensity should start to decline.Prada Financial Statement Overview
Summary
Strong profitability (gross margin ~80%, operating margin ~22–24%, net margin ~14–15%) and generally solid cash generation with improved free cash flow vs 2023. Offsetting this, 2025 showed a return to slight revenue contraction, weaker cash conversion vs 2024, and a notable leverage step-up (debt-to-equity ~1.04), increasing financial risk if demand softens.Income Statement
Prada shows strong profitability for a luxury brand, with gross margin consistently near ~80% in 2023–2025 and solid operating profitability (operating margin ~22–24% in 2023–2025). Net margin remains healthy (~14–15% in 2023–2025), reflecting good pricing power and cost control versus earlier years. The main drawback is slowing momentum: revenue growth was strong in 2021–2024 but turned slightly negative in 2025 (-2.3%), and earnings dipped modestly year over year in 2025.82
Very Positive
Balance Sheet
The balance sheet is supported by a growing equity base (equity rising from ~3.1B in 2021 to ~4.6B in 2025) and solid profitability in recent years (return on equity around ~17–19% in 2023–2024). However, leverage increased meaningfully in 2025, with debt rising to ~4.8B and debt-to-equity moving to ~1.04 (up from ~0.63 in 2024), which reduces flexibility and raises financial risk if demand softens.68
Positive
Cash Flow
Cash generation is generally solid, with operating cash flow consistently positive and free cash flow improving versus 2023 (free cash flow of ~1.0B in 2025 vs ~0.4B in 2023). That said, cash conversion weakened in 2025: operating cash flow covered a smaller share of EBITDA (~0.72 in 2025 vs ~0.98 in 2024) and free cash flow covered a lower share of net income (~0.63 in 2025 vs ~0.72 in 2024), suggesting higher working-capital needs and/or heavier cash uses.74
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.49B | 5.43B | 4.73B | 4.20B | 3.37B |
| Gross Profit | 4.41B | 4.34B | 3.80B | 2.63B | 2.55B |
| EBITDA | 2.05B | 2.01B | 1.29B | 1.06B | 687.63M |
| Net Income | 818.31M | 838.91M | 671.03M | 465.19M | 294.25M |
Balance Sheet | |||||
| Total Assets | 11.01B | 8.55B | 7.62B | 7.35B | 6.96B |
| Cash, Cash Equivalents and Short-Term Investments | 1.26B | 1.01B | 689.52M | 1.09B | 981.79M |
| Total Debt | 4.82B | 2.79B | 2.60B | 2.67B | 2.79B |
| Total Liabilities | 6.34B | 4.13B | 3.74B | 3.86B | 3.83B |
| Stockholders Equity | 4.64B | 4.40B | 3.86B | 3.47B | 3.11B |
Cash Flow | |||||
| Free Cash Flow | 1.00B | 1.19B | 395.61M | 868.84M | 923.90M |
| Operating Cash Flow | 1.59B | 1.65B | 1.16B | 1.11B | 1.14B |
| Investing Cash Flow | -1.75B | -462.45M | -759.19M | -250.21M | -137.26M |
| Financing Cash Flow | 431.92M | -875.47M | -775.73M | -787.38M | -494.73M |
Prada Technical Analysis
Negative
10.94
Price Trends
10.68
Negative
11.28
Negative
11.57
Negative
Market Momentum
-0.20
Positive
35.74
Neutral
5.65
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRDSY, the sentiment is Negative. The current price of 10.94 is above the 20-day moving average (MA) of 10.64, above the 50-day MA of 10.68, and below the 200-day MA of 11.57, indicating a bearish trend. The MACD of -0.20 indicates Positive momentum. The RSI at 35.74 is Neutral, neither overbought nor oversold. The STOCH value of 5.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PRDSY.
Prada Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $12.64B | 15.30 | 19.16% | 1.72% | 12.12% | 12.85% | |
67 Neutral | $28.71B | 11.94 | 63.26% | 1.16% | 8.14% | -65.04% | |
65 Neutral | $1.14B | -21.03 | 56.42% | ― | 97.28% | ― | |
64 Neutral | $3.41B | 50.41 | 8.20% | 1.46% | -0.40% | -68.99% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
51 Neutral | $2.19B | 6.45 | -244.66% | ― | -17.66% | -223.06% | |
46 Neutral | $1.16B | -108.42 | 11.34% | ― | 14.30% | 23.73% |
* Consumer Cyclical Sector Average
PRDSY
Prada
10.00
-4.38
-30.47%
TPR
Tapestry
143.16
73.20
104.64%
CPRI
Capri Holdings
18.53
-1.98
-9.65%
SIG
Signet Jewelers
84.96
37.42
78.70%
REAL
RealReal
9.94
4.24
74.39%
LUXE
LuxExperience
8.38
0.11
1.33%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.