Zip Co (ASX:ZIP): Valuation Check After Recent Buy-Backs and New Equity Issuances

Zip Co (ASX:ZIP) has been busy reshaping its share base, buying back millions of ordinary shares while simultaneously issuing new securities and performance rights. For investors, these moves quietly reshape dilution, earnings per share and future upside.

See our latest analysis for Zip Co.

These capital moves come after a choppy run, with the share price now at A$3.03 and a modest year to date share price return of 2.02 percent. However, the three year total shareholder return of 388.71 percent suggests long term momentum remains robust even as shorter term share price performance has cooled.

If Zip Co’s repositioning has your attention, this could be a good moment to scan the market for other fintech style names and discover fast growing stocks with high insider ownership

With revenue and earnings still climbing and the share price trading well below consensus targets, the key question now is simple: Is Zip Co undervalued, or is the market already pricing in all that future growth?

Most Popular Narrative Narrative: 40.5% Undervalued

With Zip Co last closing at A$3.03 against a narrative fair value of about A$5.10, the valuation hinges on aggressive growth and expanding margins.

The company's ongoing international expansion, particularly in the underpenetrated U.S. market where BNPL is less than 6% of e-commerce spend, provides significant runway for organic revenue growth and supports geographic diversification, de-risking the business model and enabling long-term scale.

Read the complete narrative.

Curious how this growth story justifies a much higher price tag? The narrative leans on rapid revenue compounding, expanding profit margins and a punchy future earnings multiple. Want to see exactly how those moving parts combine into that fair value call?

Result: Fair Value of $5.10 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising regulatory scrutiny and intensifying BNPL competition could compress margins, slow customer growth and undermine the optimistic fair value narrative.

Find out about the key risks to this Zip Co narrative.

Another Take On Valuation

On earnings, Zip Co looks anything but cheap. Its price to earnings ratio sits around 48.5 times, versus about 11.4 times for peers and a fair ratio closer to 30.1 times, suggesting investors are already paying up for growth and taking on valuation risk. Is that premium really justified?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Zip Co Narrative

If you are not convinced by this view, or would rather dig into the numbers yourself, you can build a custom Zip Co storyline in just a few minutes, Do it your way

A great starting point for your Zip Co research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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