ZIP share price in focus
Founded in 2013, Zip Co is a financial technology company specialising in buy-now-pay-later (BNPL) services, a popular choice among retail consumers.
Zip enables customers to make purchases instantly and pay them off over interest-free instalments, offering a flexible and convenient payment option.
Operating globally, Zip has partnered with over 79,300 retailers and serves more than 6 million customers. In September 2020, the company expanded its presence in the US market by acquiring the BNPL provider Quadpay.
MQG shares
Macquarie Group, founded in 1969, is a global investment bank and financial services company.
Unlike other major Australian banks, Macquarie combines traditional banking with a robust asset management division, operating across sectors such as infrastructure, commodities, agriculture, real estate, and global equity markets.
Macquarie is committed to delivering consistent value to its shareholders, boasting over 55 years of uninterrupted profitability.
ZIP & MQG share price valuation
As a growth company, some of the trends we might investigate from ZIP include revenue growth, profit growth, and return on equity (ROE). These measures can indicate the growth rates and prospects of the company, as well as their ability to generate returns from their assets.
Since 2021, ZIP has grown revenue at a rate of 75.7% per year to reach $868m in FY24. Over the same stretch of time, net profit has increased from -$678m to $6m. As for ROE, ZIP last reported a ROE of 1.8%.
Since MQG is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In FY24, Macquarie Group Ltd reported a debt/equity ratio of 258.5%, meaning the company is leveraged (it has more debt than equity). Higher debt levels come with increased risk so it’s important that a leveraged company has stable returns and the capacity to pay interest on its debts.
As for dividends, since 2020 MQG has paid an average dividend yield of 3.2% per year.
Finally, in FY24, MQG reported an ROE of 10.4%. For a mature business you’re generally looking for an ROE of more than 10%, so MQG clears this hurdle.
Keep in mind that these are only a small selection of metrics. We don’t have enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
