Zip Shares Overvalued as Market Underestimates Downside Risks
Zip’s business is more diversified than single-product buy now, pay later, or BNPL, players, with varieties in financing options, transaction limits, and repayment schedules.
Zip Co Ltd ZIP
Bulls Say, Bears Say
Bulls
Zip is well placed to continue growing its transaction volume, given its variety in financing options and retailer base, as well as its Pay Anywhere model which provide greater avenue to spend using its products.
Bears
Zip’s longer-dated repayment period, higher transaction values and Pay Anywhere model results in it having a considerably riskier receivables book.
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News
Trading Information
- Previous Close Price
- A$1.26
- Day Range
- A$1.26–1.31
- 52-Week Range
- A$0.26–1.60
- Bid/Ask
- A$1.30 / A$1.31
- Market Cap
- A$1.47 Bil
- Volume/Avg
- 7.4 Mil / 20.7 Mil
Key Statistics
- Price/Earnings (Normalized)
- —
- Price/Sales
- 1.50
- Dividend Yield (Trailing)
- —
- Dividend Yield (Forward)
- —
- Total Yield
- —
Company Profile
Zip is a diversified finance provider, offering consumer financing via a line of credit (via Zip Pay and Zip Money) and instalment-based finance (via QuadPay, Spotii, Twisto, and PayFlex); as well as lending to small to midsize enterprises (via Zip Business). Zip’s fortunes are largely tied to the buy now, pay later, or BNPL, industry. Most of its products—Zip Pay, QuadPay (Zip U.S.), and PayFlex—do not charge interest based on outstanding balances. Around 60%-70% of Zip Pay’s/Zip Money’s revenue is derived from customers, mainly via account fees and interest. Meanwhile, its instalment businesses primarily generate revenue by receiving a margin from merchants, which compensates it for accepting all nonpayment risk and for encouraging consumers to transact more frequently.
- Sector
- Financial Services
- Industry
- Credit Services
- Stock Style Box
- Small Core
- Total Number of Employees
- —
Competitors
Valuation
|
Metric
|
ZIP
|
CBA
|
SQ
|
|---|---|---|---|
Price/Earnings (Normalized) | — | 21.20 | 31.75 |
Price/Book Value | 3.10 | 2.74 | 2.32 |
Price/Sales | 1.50 | 7.85 | 1.92 |
Price/Cash Flow | 10.10 | — | 55.13 |
Price/Earnings
ZIP
CBA
SQ
Financial Strength
|
Metric
|
ZIP
|
CBA
|
SQ
|
|---|---|---|---|
Quick Ratio | 8.20 | — | 1.63 |
Current Ratio | 8.64 | — | 1.90 |
Interest Coverage | 0.82 | — | — |
Quick Ratio
ZIP
CBA
SQ
Profitability
|
Metric
|
ZIP
|
CBA
|
SQ
|
|---|---|---|---|
Return on Assets (Normalized) | −2.41% | 0.80% | 4.31% |
Return on Equity (Normalized) | −26.24% | 13.77% | 7.82% |
Return on Invested Capital (Normalized) | 3.56% | — | 5.73% |
Return on Assets
ZIP
CBA
SQ
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