ZIP share price in focus
Zip Co is a ‘fintech’ company founded in 2013. It offers a buy-now-pay-later (BNPL) service that is popular among retail consumers.
Zip’s platform allows customers to purchase items immediately and repay them over several interest-free instalments.
Like most BNPL companies, Zip makes money through transaction fees paid by the business, as well as late fees charged to customers who miss payments.
MQG shares
Macquarie Group is a multinational investment bank and financial services company that was founded in 1969.
Macquarie’s operations are a bit different to the rest of the big Australian banks. While it does have a normal banking division, it is also an asset management company with investment operations spanning infrastructure, commodities, agriculture, real estate, and global equity markets.
Macquarie prides itself on delivering consistent value to shareholders, with a more than 55-year record of unbroken profitability.
ZIP & MQG share price valuation
As a growth company, one way to put a broad projection on the ZIP share price could be to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, Zip Co Ltd shares have a price-sales ratio of 3.76x, compared to its 5-year average of 5.81x, meaning its shares are trading lower than their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of ZIP, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
Since MQG is more of a ‘blue chip’ company, we could look at its dividend yield to determine its value. If we compare it to the historical dividend yield, we can get a sense of the stability of the company and its ability to pay out income. MQG is paying a trailing dividend yield of around 2.68%, which compares to its 5-year average of 3.16%.
This is just one of many ways you could put a value on MQG shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets which can help you learn how to value a company like ZIP or MQG.
