Investment Analysis Report: ZGN

Overview

ZGN is a company operating in the Consumer Non-Durables sector, specifically in the Apparel/Footwear industry. The company has a market capitalization of $3.24 billion. In this report, we will conduct a comprehensive analysis of ZGN's financial statements over the past three years to evaluate its financial health, earnings and revenue growth, profitability, operating margin, operating cash flow, capital expenditure trends, and efficiency.

Balance Sheets Analysis

Key Observations:

• Total Assets: ZGN's total assets have shown a consistent increase over the past three years, from $2.79 billion in 2020 to $2.59 billion in 2022.
• Total Liabilities: The total liabilities have also increased from $2.06 billion in 2021 to $1.81 billion in 2022, indicating a reduction in debt.
• Shareholders' Equity: Shareholders' equity has been on an upward trend, reaching $242.80 million in 2022 from $157.45 million in 2021.
• Goodwill and Intangible Assets: The company has a significant amount of goodwill and intangible assets, which have remained relatively stable over the years.

Analysis:

ZGN's balance sheet reflects a healthy financial position with a steady increase in total assets and shareholders' equity. The reduction in total liabilities indicates a positive trend towards debt reduction. The presence of goodwill and intangible assets suggests that the company has invested in valuable assets to support its operations and growth.

Income Statements Analysis

Key Observations:

• Total Revenue: ZGN's total revenue has shown consistent growth over the past three years, increasing from $0 in 2020 to $1.57 billion in 2022.
• Net Income: The company reported a net loss of $160.75 million in 2021, which improved to a net income of $54.11 million in 2022.
• Operating Income: Operating income has also shown improvement, with a positive trend from a loss of $114.60 million in 2021 to a profit of $106.23 million in 2022.
• Earnings per Share (EPS): The EPS has fluctuated over the years, with a loss of $0.79 in 2021 and a positive EPS of $0.23 in 2022.

Analysis:

ZGN's income statements reflect a significant improvement in total revenue, net income, and operating income over the past three years. The company has successfully turned its losses into profits, indicating a positive trajectory in terms of earnings and revenue growth.

Cashflow Statements Analysis

Key Observations:

• Operating Cash Flow: ZGN's operating cash flow has shown a positive trend, increasing from $109,450 in 2020 to $153.86 million in 2022.
• Free Cash Flow: The company's free cash flow has also improved, reaching $102.24 million in 2022 from $238.12 million in 2021.
• Ending Cash: ZGN's ending cash position has fluctuated over the years, with $271.42 million in 2022.

Analysis:

ZGN's cash flow statements indicate a strong operating cash flow and free cash flow, reflecting the company's ability to generate cash from its core operations. The fluctuation in ending cash position may be attributed to investment activities or debt repayments.

Investment Analysis and Recommendations

Valuation:

ZGN's market capitalization of $3.24 billion reflects the market's perception of the company's value. The consistent growth in total revenue and improvement in profitability indicate a positive outlook for the company's valuation.

Financial Health:

ZGN's balance sheet shows a healthy financial position with increasing total assets and shareholders' equity. The reduction in total liabilities and debt over the years signifies improved financial health and stability.

Earnings and Revenue Growth:

The company has demonstrated strong revenue growth over the past three years, with a significant increase in total revenue. The turnaround from net losses to profits reflects positive earnings growth potential.

Profitability:

ZGN's profitability has improved, as evidenced by the positive net income and operating income in 2022. The company's ability to generate profits indicates efficient operations and management.

Operating Margin and Operating Cash Flow Analysis:

The positive trend in operating income and operating cash flow highlights ZGN's operational efficiency and cash generation capabilities. The company's ability to convert revenue into cash is a positive indicator of financial health.

Capital Expenditure Trends and Efficiency:

ZGN's capital expenditure trends have been relatively stable, with a focus on investments to support growth and operations. The improvement in free cash flow indicates efficient capital allocation and utilization.

Investment Recommendations:

Based on the analysis of ZGN's financial statements, the company shows promising growth potential and financial stability. The consistent increase in total revenue, profitability, and cash flow positions ZGN as a strong investment opportunity. Therefore, the recommendation for investors would be to consider ZGN as a potential investment option.

Viewpoint:

[Positive]

In conclusion, ZGN's financial statements reflect a company with strong growth potential, improving profitability, and sound financial health. The positive trends in revenue, earnings, and cash flow indicate a promising outlook for the company. Investors looking for a growth opportunity in the Consumer Non-Durables sector may find ZGN to be an attractive investment option.