Education
About Us
Working with TipRanks
Follow Us
Ermenegildo Zegna (ZGN)
NYSE:ZGN
Top Page
Ermenegildo Zegna
(NYSE:ZGN)
65Neutral
Positive Factors
Financial Performance
Zegna reported solid EBIT margin expansion of +44bps to 10.5% in 2H, driven by solid y/y expansion in the Zegna segment and the Tom Ford Fashion segment reporting positive adj EBIT results.
Strategic Acquisitions
Zegna has expanded through acquiring two international luxury brands, Thom Browne and Tom Ford Fashion, enhancing its luxury market presence.
Valuation
Zegna is considered one of the more undervalued stories in luxury.
Negative Factors
Cost Pressures
Increased costs to compete due to the Group's focus on direct-to-consumer and store network expansions.
Growth Challenges
The subdued luxury consumption environment means achieving management's ambitious guidance will take longer.
Market Risks
The Group's high exposure to Chinese nationals presents risks compared to its peers.
Ermenegildo Zegna (ZGN) vs. S&P 500 (SPY)
Market Cap
$2.64B
Dividend Yield1.99%
Average Volume (3M)868.47K
Price to Earnings (P/E)19.5
Beta (1Y)0.90
Revenue Growth2.26%
EPS Growth-37.52%
CountryUS
Employees7,185
SectorConsumer Cyclical
Sector Strength46
IndustryApparel - Manufacturers
Share Statistics
EPS (TTM)0.33
Shares Outstanding252,579,880
10 Day Avg. Volume969,169
30 Day Avg. Volume868,470
Financial Highlights & Ratios
PEG Ratio0.79
Price to Book (P/B)N/A
Price to Sales (P/S)0.87
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.13Price Target Upside41.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Ermenegildo Zegna Business Overview & Revenue Model
Company DescriptionErmenegildo Zegna (ZGN) is a leading global luxury fashion brand renowned for its high-quality menswear and accessories. Established in 1910 in Trivero, Italy, the company specializes in creating premium suits, outerwear, knitwear, shirts, and leather goods, all crafted with meticulous attention to detail. Zegna is committed to sustainability and innovation, incorporating advanced technologies and sustainable materials into its product lines. With a strong heritage in textile manufacturing, Zegna also produces high-end fabrics and textiles for its own use and for other luxury brands.
How the Company Makes MoneyErmenegildo Zegna generates revenue through multiple streams, primarily from the sale of luxury menswear and accessories. The company operates a network of retail stores, including flagship locations in major cities around the world, and an e-commerce platform that extends its reach globally. Zegna's revenue model includes wholesale distribution to high-end department stores and specialty retailers, as well as direct-to-consumer sales through its own retail outlets and online channels. The company also benefits from its textile manufacturing operations, supplying high-quality fabrics to other luxury brands. Strategic partnerships and collaborations with other fashion and lifestyle companies further enhance Zegna's brand visibility and contribute to its earnings.
Ermenegildo Zegna Financial Statement Overview
Summary
Ermenegildo Zegna enjoys a robust financial position with strong revenue and profit growth, improved margins, and efficient cash flow management. The company has successfully enhanced its profitability and operational efficiency, while maintaining a balanced approach to leverage. Continued focus on sustaining growth, managing debt, and expanding cash flows will be critical for long-term success.Income Statement
Ermenegildo Zegna's income statement shows a strong performance with a significant increase in total revenue from 2022 to 2023, marking a growth rate of 27.55%. Gross profit margin improved substantially from 49.82% in 2022 to 64.28% in 2023, indicating enhanced cost efficiency. The net profit margin rose from 3.45% to 6.38%, reflecting increased profitability. EBIT and EBITDA margins also showed positive trends, which suggest robust operational performance. However, the company needs to maintain this positive trajectory to ensure long-term growth.85
Very Positive
Balance Sheet
The balance sheet of Ermenegildo Zegna indicates a stable financial structure with a moderate debt-to-equity ratio of 1.19 in 2023, slightly down from 1.35 in 2022, showing improved leverage management. The return on equity increased significantly to 14.46% from 7.58%, reflecting better utilization of equity capital to generate profits. The equity ratio remains moderate at 30.37%, suggesting a balanced approach between debt and equity financing. Nevertheless, further reduction in debt might be beneficial to reduce financial risk.78
Positive
Cash Flow
The cash flow statement reveals strong cash generation capability with a remarkable increase in free cash flow from 2022 to 2023, resulting in a growth rate of 170.12%. The operating cash flow to net income ratio of 2.27 in 2023 indicates efficient cash flow management. The free cash flow to net income ratio is 1.63, showing that the company is generating sufficient cash to cover net income. Continued focus on sustaining cash flow growth will be essential for future investments and dividend payouts.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.96B | 1.90B | 1.49B | 1.29B | 1.01B | 1.32B | Gross Profit |
| 1.28B | 1.22B | 743.59M | 925.13M | 698.77M | 931.82M | EBIT |
| 170.33M | 208.15M | 147.78M | 80.61M | -4.31M | 88.64M | EBITDA |
| 256.65M | 392.95M | 288.99M | 71.14M | 151.03M | 265.06M | Net Income Common Stockholders |
| 100.65M | 121.53M | 51.48M | -127.66M | -46.54M | 21.75M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 190.80M | 387.03M | 572.99M | 800.17M | 630.94M | 595.06M | Total Assets |
| 698.50M | 2.77B | 2.43B | 2.46B | 2.42B | 2.64B | Total Debt |
| 327.78M | 996.35M | 914.56M | 1.07B | 1.08B | 1.13B | Net Debt |
| 273.20M | 700.07M | 660.24M | 607.20M | 759.43M | 922.11M | Total Liabilities |
| 517.13M | 1.87B | 1.69B | 1.81B | 1.77B | 1.91B | Stockholders Equity |
| 181.37M | 840.29M | 678.95M | 601.21M | 601.76M | 688.77M |
| Cash Flow | Free Cash Flow | ||||
| 208.99M | 197.50M | 73.10M | 186.83M | 31.75M | 114.62M | Operating Cash Flow |
| 288.25M | 275.38M | 146.40M | 281.15M | 70.91M | 174.12M | Investing Cash Flow |
| -120.91M | 21.79M | -57.34M | -82.00M | 92.57M | 83.96M | Financing Cash Flow |
| -196.37M | -250.49M | -297.00M | -64.11M | -49.05M | -267.49M |
Ermenegildo Zegna Technical Analysis
Negative
6.47
Price Trends
8.19
Negative
8.15
Negative
9.01
Negative
Market Momentum
-0.24
Negative
41.85
Neutral
40.13
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZGN, the sentiment is Negative. The current price of 6.47 is below the 20-day moving average (MA) of 7.28, below the 50-day MA of 8.19, and below the 200-day MA of 9.01, indicating a bearish trend. The MACD of -0.24 indicates Negative momentum. The RSI at 41.85 is Neutral, neither overbought nor oversold. The STOCH value of 40.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZGN.
Ermenegildo Zegna Risk Analysis
Ermenegildo Zegna disclosed 45 risk factors in its most recent earnings report. Ermenegildo Zegna reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ermenegildo Zegna Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $12.23B | 18.04 | 27.57% | 1.67% | 5.23% | 24.63% | |
72 Outperform | $3.45B | 6.22 | 11.67% | 0.23% | -6.13% | -2.63% | |
71 Outperform | $13.47B | 18.89 | 39.82% | 2.15% | 0.74% | -12.69% | |
65 Neutral | $2.64B | 19.52 | 8.89% | 1.99% | 2.26% | -37.52% | |
63 Neutral | $3.72B | 17.61 | 12.01% | 1.78% | -3.35% | -6.09% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
50 Neutral | $4.55B | ― | -16.13% | 3.08% | -8.42% | 57.91% |
* Consumer Cyclical Sector Average
Performance Comparison
ZGN
Ermenegildo Zegna
6.60
-5.43
-45.14%
TPR
Tapestry
62.94
20.92
49.79%
COLM
Columbia Sportswear
68.84
-6.44
-8.55%
PVH
PVH
67.72
-41.44
-37.96%
RL
Ralph Lauren
197.62
29.69
17.68%
VFC
VF
11.56
-1.68
-12.69%
Ermenegildo Zegna Earnings Call Summary
Earnings Call Date: Mar 27, 2025 | % Change Since: -8.62% | Next Earnings Date: Sep 5, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive developments, particularly in North America and strategic investments, alongside challenges in the Thom Browne segment and GCR. While the company showed resilience and strategic forward movement, some areas like China and the textile segment faced headwinds.Highlights
Q4 2024 Revenue Growth
Q4 2024 revenue grew by 3%, both organic and reported. The Zegna brand grew 7% organically, and the DTC channel grew 8% organically at the group level. North America delivered 15% organic growth.
Strong Performance in North America
North America delivered 15% organic growth, driven by sequential acceleration and better-than-group performance for the Zegna brand.
Strategic Investments and Strengthening
In 2024, the company reinforced talents, strengthened the business division at TOM FORD FASHION, invested in CRM, and enhanced merchandising and retail operations across regions.
Zegna Brand's Product Innovation
The Zegna Vellus Aureum project, showcasing the finest wool textiles, was acclaimed at Men's Fashion Week.
TOM FORD FASHION's Positive Trends
TOM FORD FASHION recorded a 9% organic growth in DTC in Q4, with a strong performance in the U.S. and EMEA.
Lowlights
Decline in Thom Browne and Textile Segments
Thom Browne segment revenues declined by 4%, and textile performance was negative at -30% organic, largely due to decreasing demand from luxury brands outside the group.
Challenges in Greater China Region (GCR)
GCR revenues declined by 11% in Q4, showing a sequential improvement from Q3 but still facing limited visibility and volatility.
Company Guidance
During the Ermenegildo Zegna Group's call on January 27, 2025, the leadership team, including CEO Gildo Zegna and CFO Gianluca Tagliabue, provided guidance and key metrics for Q4 2024. The group's total revenue grew by 3% organically, with the Zegna brand experiencing a 7% organic growth and the direct-to-consumer channel growing by 8%. The North American region led with a 15% organic growth, supported by a strong performance from the Zegna brand. The group highlighted strategic initiatives such as reinforcing talent, enhancing CRM, and expanding geographic focus on the U.S. and the Middle East. The leadership emphasized a shift towards a more integrated model across corporate functions to drive efficiency. Despite a challenging environment affecting profitability, the group remains committed to long-term brand value enhancement and market expansion, particularly in the U.S. and EMEA for TOM FORD FASHION, and continued investment in the Filiera supply chain for excellence and innovation. Overall, the call focused on the group's strategic positioning and selective investment in key projects to drive future growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.