Ermenegildo Zegna N.V. Ordinary Shares (ZGN)

FairStock Score: 40/100 — MIXED

Key Financials

Strengths

• Generates $247 million in annual free cash flow (7.7% yield on market cap)
• Solid return on equity of 10.5% above cost of capital

Concerns

• Trades significantly above Graham Number ($6) with negative 91% margin of safety—limited downside protection
• Weak Piotroski F-Score of 2/9 suggests deteriorating financial quality across multiple dimensions
• Altman Z-Score of 1.7 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Ermenegildo Zegna N.V. Ordinary Shares is a small-cap consumer cyclical company valued at $3.2 billion. Revenue stands at $1.9 billion. From a quality standpoint, Ermenegildo shows weak Piotroski F-Score of 2/9 signaling deteriorating fundamentals and distressed Altman Z-Score of 1.7 warrants caution. On valuation, the stock is trading at a premium 26.6x earnings, with trades above its Graham Number with a negative 91% margin. The 1.2% dividend yield adds an income component for patient holders. Our composite FairStock Score of 40/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $247 million in annual free cash flow (7.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer cyclical space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer