Critical Analysis: Ermenegildo Zegna (NYSE:ZGN) & ON (NYSE:ONON)

Ermenegildo Zegna (NYSE:ZGN) and ON (NYSE:ONON) are both retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Insider and Institutional Ownership

12.9% of Ermenegildo Zegna shares are owned by institutional investors. Comparatively, 36.4% of ON shares are owned by institutional investors. 1.2% of Ermenegildo Zegna shares are owned by company insiders. Comparatively, 68.6% of ON shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Ermenegildo Zegna and ON”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ermenegildo Zegna	$2.17 billion	2.71	$111.54 million	N/A	N/A
ON	$3.64 billion	6.81	$245.87 million	$0.93	41.74

ON has higher revenue and earnings than Ermenegildo Zegna.

Analyst Ratings

This is a summary of current recommendations for Ermenegildo Zegna and ON, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ermenegildo Zegna	0	4	5	0	2.56
ON	1	4	15	2	2.82

Ermenegildo Zegna currently has a consensus target price of $12.68, indicating a potential downside of 8.74%. ON has a consensus target price of $55.05, indicating a potential upside of 41.82%. Given ON’s stronger consensus rating and higher possible upside, analysts clearly believe ON is more favorable than Ermenegildo Zegna.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ermenegildo Zegna	N/A	N/A	N/A
ON	7.92%	15.72%	8.99%

Risk and Volatility

Ermenegildo Zegna has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, ON has a beta of 2.1, indicating that its stock price is 110% more volatile than the S&P 500.

Summary

ON beats Ermenegildo Zegna on 13 of the 13 factors compared between the two stocks.

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.

About ON

On Holding AG engages in the development and distribution of sports products such as footwear, apparel, and accessories for high-performance running, outdoor, all-day activities, and tennis. It sells its products worldwide through independent retailers and global distributors, its own online presence, and its own stores. The company was founded by David Allemann, Olivier Bernhard, and Caspar Coppetti in January 2010 and is headquartered in Zurich, Switzerland.