Ermenegildo Zegna (ZGN) AI Stock Analysis

• Market Cap: $3.73B
• Dividend Yield: 1.44%
• Average Volume (3M): 1.56M
• Price to Earnings (P/E): 27.6
• Beta (1Y): 1.12
• Revenue Growth: 2.26%
• EPS Growth: -37.52%
• Country: US
• Employees: 7,185
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Apparel - Manufacturers
• EPS (TTM): 0.25
• Shares Outstanding: 252,579,880
• 10 Day Avg. Volume: 2,843,578
• 30 Day Avg. Volume: 1,557,835
• PEG Ratio: -0.34
• Price to Book (P/B): 3.42
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 31.77
• 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: $9.50
• Price Target Upside: 3.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 76 Outperform
• Price Target: $9.50 ▲(3.83%Upside)

Ermenegildo Zegna's strong technical indicators and positive earnings call sentiment are key strengths. Financial performance shows robust revenue growth, but declining margins and high leverage are risks. The high P/E ratio suggests valuation concerns.

Positive Factors

Brand Performance

Zegna brand continues to outperform, also helped by solid brand momentum.

Market Strength

Zegna continues to enjoy strength in developed markets, with EMEA and US DTC up double-digit.

Revenue Growth

Zegna DTC will be among three luxury companies where faster revenue growth is expected in the second quarter compared to the first quarter, alongside Hermes and Burberry.

Negative Factors

Regional Weakness

Greater China remains the weakest part of the business at -12% organic, weighed by particular softness in Hong Kong.

Tourism Spend

The key driver of the sector slowdown is reduced tourism spend in both Europe and Japan.

Wholesale Challenges

Wholesale sales declined organically by 19% year-over-year as Zegna works to streamline Thom Browne's wholesale channel.

Ermenegildo Zegna Business Overview & Revenue Model

Company Description

Ermenegildo Zegna N.V., together with its subsidiaries, designs, manufactures, markets, and distributes luxury menswear, footwear, leather goods, and other accessories under the Zegna and the Thom Browne brands. It provides luxury leisurewear for men; formal suits, tuxedos, shirts, blazers, formal overcoats, and accessories; leather accessories comprising shoes, bags, belts, and small leather accessories; and fragrances. The company also offers luxury womenswear and childrenswear under the Thom Browne brand, as well as provides eyewear, cufflinks and jewelry, watches, underwear, and beachwear manufactured by third parties under licenses. It serves customers through its retail stores and online channels in Europe, the Middle East, Africa, North America, Latin America, the Asia Pacific, and internationally. The company was founded in 1910 and is based in Trivero, Italy. Ermenegildo Zegna N.V. is a subsidiary of Monterubello Societa' Semplice.

How the Company Makes Money

Ermenegildo Zegna generates revenue primarily through the sale of its luxury menswear and accessories. The company operates a network of directly-operated stores, as well as through wholesale partnerships with high-end department stores and specialty retailers worldwide. A significant portion of its income comes from its in-house designed and manufactured products, which are characterized by high-quality materials and craftsmanship. Zegna also leverages its prestigious brand to establish strategic partnerships and collaborations, further enhancing its market presence and revenue potential. Additionally, the company emphasizes sustainability and innovation in its production processes, which not only appeals to eco-conscious consumers but also helps in maintaining operational efficiency and cost management.

Ermenegildo Zegna Financial Statement Overview

Summary

Ermenegildo Zegna shows strong revenue growth and gross margins, but declining net profit margin and increased leverage are concerning. Cash generation is stable, but higher capital expenditures have impacted free cash flow.

Income Statement

Ermenegildo Zegna has demonstrated a steady revenue growth trajectory, with total revenue increasing from $1.49 billion in 2022 to $1.95 billion in 2024, showing a notable 30% growth over two years. The gross profit margin improved to 66.6% in 2024, indicating strong cost management. However, the net profit margin has decreased to 3.96% in 2024 from 6.38% in 2023, suggesting rising expenses or lower operational efficiency. The EBIT margin is stable at 8.57%, but the declining EBITDA margin from 20.63% in 2023 to 20.87% in 2024 indicates pressure on operating profitability.

Balance Sheet

The company's debt-to-equity ratio has increased to 1.13 in 2024, reflecting higher leverage, which could pose risks if earnings do not grow as expected. Return on equity (ROE) dropped to 8.41% in 2024 from 14.46% in 2023, showing reduced profitability for shareholders. However, the equity ratio has improved to 32.31% in 2024 from 30.37% in 2023, indicating a healthier balance between debt and equity financing.

Cash Flow

Ermenegildo Zegna's operating cash flow increased slightly to $279 million in 2024, reflecting stable cash-generating operations. The free cash flow, however, dropped to $153.6 million in 2024 from $197.5 million in 2023, due to higher capital expenditures. The free cash flow to net income ratio remains strong at 1.99, suggesting good cash conversion from earnings.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.95B	1.90B	1.49B	1.29B	1.01B
Gross Profit	1.30B	1.22B	743.59M	925.13M	698.77M
EBITDA	406.23M	392.95M	288.99M	71.14M	151.03M
Net Income	77.08M	121.53M	51.48M	-127.66M	-46.54M
Balance Sheet
Total Assets	2.83B	2.77B	2.43B	2.46B	2.42B
Cash, Cash Equivalents and Short-Term Investments	296.13M	387.03M	572.99M	800.17M	630.94M
Total Debt	1.04B	996.35M	914.56M	1.07B	1.08B
Total Liabilities	1.85B	1.87B	1.69B	1.81B	1.77B
Stockholders Equity	916.12M	840.29M	678.95M	601.21M	601.76M
Cash Flow
Free Cash Flow	153.60M	197.50M	73.10M	186.83M	31.75M
Operating Cash Flow	279.13M	275.38M	146.40M	281.15M	70.91M
Investing Cash Flow	-126.01M	21.79M	-57.34M	-82.00M	92.57M
Financing Cash Flow	-234.53M	-250.49M	-297.00M	-64.11M	-49.05M

Ermenegildo Zegna Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.15
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZGN, the sentiment is Positive. The current price of 9.15 is above the 20-day moving average (MA) of 8.73, above the 50-day MA of 8.44, and above the 200-day MA of 8.23, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 61.25 is Neutral, neither overbought nor oversold. The STOCH value of 58.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZGN.

Ermenegildo Zegna Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LEVI	77 Outperform	$7.55B	21.50	18.03%	2.70%	4.63%	187.50%
ZGN	76 Outperform	$3.73B	27.60	8.89%	1.44%	2.26%	-37.52%
RL	76 Outperform	$16.95B	24.11	29.49%	1.33%	6.75%	19.71%
COLM	71 Outperform	$3.49B	16.30	12.34%	1.87%	-1.69%	-4.01%
PVH	68 Neutral	$3.48B	10.21	8.31%	0.20%	-3.63%	-37.24%
Sector *	56 Neutral	$3.37B	4.05	-1.30%	6.64%	0.16%	-63.79%
VFC	47 Neutral	$4.86B	―	-2.39%	2.88%	-7.52%	94.28%