ASX:Z1P

Stock Analysis Report

Executive Summary

Zip Co Limited provides point-of-sale credit and digital payment services to consumers and merchants in Australia and New Zealand.


Snowflake Analysis

Exceptional growth potential with worrying balance sheet.


Similar Companies

Share Price & News

How has Zip Co's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: Z1P has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-10.8%

Z1P

-2.8%

AU Consumer Finance

0.02%

AU Market


1 Year Return

153.5%

Z1P

66.8%

AU Consumer Finance

14.6%

AU Market

Return vs Industry: Z1P exceeded the Australian Consumer Finance industry which returned 66.8% over the past year.

Return vs Market: Z1P exceeded the Australian Market which returned 14.6% over the past year.


Shareholder returns

Z1PIndustryMarket
7 Day-10.8%-2.8%0.02%
30 Day-10.5%1.7%0.2%
90 Day-2.7%6.0%5.7%
1 Year153.5%153.5%70.7%66.8%19.7%14.6%
3 Year396.6%396.6%54.0%40.0%38.7%20.2%
5 Yearn/a38.1%11.8%50.6%17.1%

Price Volatility Vs. Market

How volatile is Zip Co's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Zip Co undervalued compared to its fair value and its price relative to the market?

16.85x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: Z1P (A$3.65) is trading above our estimate of fair value (A$0.56)

Significantly Below Fair Value: Z1P is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: Z1P is unprofitable, so we can't compare its PE Ratio to the Consumer Finance industry average.

PE vs Market: Z1P is unprofitable, so we can't compare its PE Ratio to the Australian market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate Z1P's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: Z1P is overvalued based on its PB Ratio (16.8x) compared to the AU Consumer Finance industry average (2.1x).


Next Steps

Future Growth

How is Zip Co forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

94.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Z1P is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.1%).

Earnings vs Market: Z1P is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: Z1P's is expected to become profitable in the next 3 years.

Revenue vs Market: Z1P's revenue (43.1% per year) is forecast to grow faster than the Australian market (4.2% per year).

High Growth Revenue: Z1P's revenue (43.1% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Z1P's Return on Equity is forecast to be high in 3 years time (22.7%)


Next Steps

Past Performance

How has Zip Co performed over the past 5 years?

-32.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: Z1P is currently unprofitable.

Growing Profit Margin: Z1P is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: Z1P is unprofitable, and losses have increased over the past 5 years at a rate of -32.1% per year.

Accelerating Growth: Unable to compare Z1P's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: Z1P is unprofitable, making it difficult to compare its past year earnings growth to the Consumer Finance industry (10.7%).


Return on Equity

High ROE: Z1P has a negative Return on Equity (-14.59%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Zip Co's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: Z1P has a low level of unsold assets or inventory.

Debt Coverage by Assets: Z1P's debt is covered by short term assets (assets are 1.1x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable Z1P has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: Z1P is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 29.2% per year.


Financial Institutions Analysis

Asset Level: Z1P's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if Z1P has a sufficient allowance for bad loans.

Low Risk Liabilities: Z1P reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if Z1P has an acceptable proportion of non-loan assets held.

Low Risk Deposits: Z1P has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if Z1P has an appropriate level of bad loans.


Next Steps

Dividend

What is Zip Co's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%2.3%markettop25%5.3%industryaverage2.9%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate Z1P's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate Z1P's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if Z1P's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if Z1P's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of Z1P's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.8yrs

Average management tenure


CEO

Larry Diamond 0

AU$589,717

Compensation

Mr. Larry Diamond serves as the Chief Executive Officer and Managing Director of Zipmoney Limited. Mr. Diamond co-founded zipMoney in 2013 following 12 years’experience in retail, IT, corporate finance and ...


CEO Compensation Analysis

Compensation vs Market: Larry's total compensation ($USD391.29K) is below average for companies of similar size in the Australian market ($USD939.86K).

Compensation vs Earnings: Larry's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Larry Diamond
CEO, MD & Executive Director0yrsAU$589.72k15.75% A$224.4m
Martin Brooke
Chief Financial Officer3.1yrsAU$471.59k0.039% A$549.5k
Peter Gray
COO & Executive Director4.4yrsAU$568.40k4.95% A$70.6m
Jonathan Englert
Media & Communication Officer0yrsno datano data
Tommy Mermelshtayn
Chief Strategy Officer3.3yrsno datano data
Andy Mitchell
Chief Growth Officer2.5yrsno datano data
David Franks
Company Secretary0.7yrsno datano data

2.8yrs

Average Tenure

Experienced Management: Z1P's management team is considered experienced (2.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Larry Diamond
CEO, MD & Executive Director0yrsAU$589.72k15.75% A$224.4m
Peter Gray
COO & Executive Director4.4yrsAU$568.40k4.95% A$70.6m
David Shein
Member of Advisory Board0yrsno datano data
Geoffrey Levy
Member of Advisory Board0yrsno datano data
John Batistich
Non-Executive Director1.4yrsAU$91.25k0.093% A$1.3m
Dianne Challenor
Non-Executive Director2yrsno datano data
Philip Crutchfield
Non-Executive Chairman4.2yrsAU$153.30k1.23% A$17.5m
Nati Harpaz
Member of Advisory Board3.8yrsno datano data
Simon Schwarz
Member of Advisory Board0yrsno datano data

4.0yrs

Average Tenure

Experienced Board: Z1P's board of directors are considered experienced (4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 10%.


Top Shareholders

Company Information

Zip Co Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Zip Co Limited
  • Ticker: Z1P
  • Exchange: ASX
  • Founded: 2013
  • Industry: Consumer Finance
  • Sector: Diversified Financials
  • Market Cap: AU$1.425b
  • Shares outstanding: 390.39m
  • Website: https://zipmoneylimited.com.au

Number of Employees


Location

  • Zip Co Limited
  • 126 Phillip Street
  • Level 5
  • Sydney
  • New South Wales
  • 2000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
Z1PASX (Australian Securities Exchange)YesShare CapitalAUAUDSep 2015
Z1PCHIA (Chi-X Australia)YesShare CapitalAUAUDSep 2015
YRRDB (Deutsche Boerse AG)YesShare CapitalDEEURSep 2015

Biography

Zip Co Limited provides point-of-sale credit and digital payment services to consumers and merchants in Australia and New Zealand. It offers integrated retail finance solutions to small, medium, and enterprise businesses across various industries through online and in-store. The company provides zip Pay and zip Money, which are digital wallets; and Pocketbook, a mobile app that automatically categorizes spending. It serves the retail, home, health and wellness, auto, travel, and entertainment sectors. The company was formerly known as ZipMoney Limited and changed its name to Zip Co Limited in December 2017. Zip Co Limited was founded in 2013 and is based in Sydney, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/23 10:39
End of Day Share Price2020/02/21 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.