Financial Analysis: Ermenegildo Zegna (NYSE:ZGN) versus Vera Bradley (NASDAQ:VRA)

Vera Bradley (NASDAQ:VRA) and Ermenegildo Zegna (NYSE:ZGN) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Risk & Volatility

Vera Bradley has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500. Comparatively, Ermenegildo Zegna has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Vera Bradley and Ermenegildo Zegna, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vera Bradley	1	2	0	0	1.67
Ermenegildo Zegna	0	3	4	0	2.57

Ermenegildo Zegna has a consensus target price of $11.73, suggesting a potential upside of 21.10%. Given Ermenegildo Zegna’s stronger consensus rating and higher possible upside, analysts plainly believe Ermenegildo Zegna is more favorable than Vera Bradley.

Valuation & Earnings

This table compares Vera Bradley and Ermenegildo Zegna”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vera Bradley	$269.65 million	0.36	-$62.19 million	($3.50)	-0.99
Ermenegildo Zegna	$2.11 billion	1.87	$83.41 million	N/A	N/A

Ermenegildo Zegna has higher revenue and earnings than Vera Bradley.

Profitability

This table compares Vera Bradley and Ermenegildo Zegna’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vera Bradley	-17.74%	-11.85%	-6.32%
Ermenegildo Zegna	N/A	N/A	N/A

Institutional & Insider Ownership

59.9% of Vera Bradley shares are held by institutional investors. Comparatively, 12.9% of Ermenegildo Zegna shares are held by institutional investors. 12.1% of Vera Bradley shares are held by insiders. Comparatively, 1.2% of Ermenegildo Zegna shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Ermenegildo Zegna beats Vera Bradley on 9 of the 12 factors compared between the two stocks.

About Vera Bradley

Vera Bradley, Inc., together with its subsidiaries, designs, manufactures, and sells women’s handbags, luggage and travel items, fashion and home accessories, and gifts. It operates through three segments: Vera Bradley Direct, Vera Bradley Indirect, and Pura Vida. The company offers bag products, such as totes, crossbodies, satchels, clutches, backpacks, baby bags, and lunch bags; accessories, including ID holders, lanyards, wallets, wristlets, eyewear, scarves, hair accessories, and various technology accessories; bracelets, rings, and necklaces under Pura Vida brand name; and travel products consist of rolling luggage, cosmetics, and travel and packing accessories, as well as travel bags comprising duffel and weekend bags. It also provides home products that include throw blankets, beach towels, and comforters, as well as items, such as mugs and tumblers; apparel/footwear comprising sleepwear, footwear, outerwear, tees and hoodies, and socks; and stationery and merchandising products, as well as freight, licensing, and gift card breakage services. The company sells its Vera Bradley branded products through its full-line and outlet stores in the United States; verabradley.com, an online outlet site; its annual outlet sale in Fort Wayne, Indiana. It sells its Pura Vida branded products through wholesale retailers and Pura Vida websites, including www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca; and Vera Bradley Indirect branded products to specialty retail locations, department stores, national accounts, third party e-commerce sites, third-party inventory liquidators, and through licensing agreements. Vera Bradley, Inc. was incorporated in 1982 and is headquartered in Roanoke, Indiana.

About Ermenegildo Zegna

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. operates as a subsidiary of Monterubello Societa’ Semplice.