Salvatore Ferragamo stock: is it undervalued?

Salvatore Ferragamo (SFER.MI) stock is attracting growing interest in the financial markets, despite recent lacklustre financial performance. This dynamic raises questions about the reasons for this sustained attention and the company's current valuation.

Attractive valuation, fragile fundamentals

As of August 19, 2025, Salvatore Ferragamo stock is trading at around 4.66 euros, up 3.55 percent on the day. This performance comes after a 31.08 percent drop since the beginning of the year. With a market capitalisation of approximately 747 million euros and a price earnings ratio of 11.6x for 2025, the company has a moderate valuation compared to other players in the luxury sector, according to data from Zonebourse.

However, the company's fundamentals are showing signs of fragility. In the first half of 2025, revenue decreased by 7.1 percent to 474 million euros. There was an 11.8 percent drop in the second quarter. This trend is attributed to disappointing performance in Asia-Pacific, particularly in Japan. There was an 18.6 percent drop in this region, as reported by Vogue Business.

Strategic plan to revive the brand

Faced with these challenges, Salvatore Ferragamo has unveiled a strategic plan to turn things around. This plan, implemented under the leadership of Ernesto Greco while awaiting the appointment of a new chief executive officer, includes several key areas. These include improving product aesthetics, with an emphasis on timeless Italian elegance and drawing on the brand's archives.

The plan also includes optimising the distribution network by reducing the number of product references (SKUs) and revising the pricing strategy. Finally, communication will be renewed, with a reduction in spending on influencers and fashion shows in favour of digital campaigns and in-store events.

Why the stock might be undervalued

Investor interest in Salvatore Ferragamo stock can be explained by several factors. Its valuation is considered attractive. The price earnings ratio of 11.6x for 2025 is lower than that of many competitors in the luxury sector. The potential for strategic recovery could improve the company's performance in the medium term. The expected dividend of 0.10 euros per share, although modest, also offers a stable return, according to Simply Wall Street.

However, some analysts remain cautious. Citi lowered its price target from 5.30 euros to 4.65 euros, while Barclays maintains an "underweight" rating. These positions reflect doubts about the implementation of the strategic plan and the stabilisation of the macroeconomic situation. These factors remain crucial to confirm the undervaluation hypothesis.

Balanced position

Salvatore Ferragamo stock offers investors a strategic bet on a revival. Its moderate valuation and the implementation of a credible recovery plan give it medium-term growth potential. However, macroeconomic uncertainties and the effectiveness of its implementation remain points of vigilance for the markets.