Zip CoASX:ZIP +3.51%62 Return-on-Tangible-Equity is 24.44% as of Dec. 2025. GuruFocus rates ASX:ZIP with a GF Score™ of 62/100 and a GF Value™ of A$2.07 (Significantly Overvalued). The stock has 7 warning signs investors should review. Among 525 Credit Services companies, Zip Co ranks better than 89.9% on this metric.
Return-on-Tangible-Equity is calculated as Net Income divided by its average total shareholder tangible equity. Total shareholder tangible equity equals to Total Stockholders Equity minus Intangible Assets. Zip Co's annualized net income for the quarter that ended in Dec. 2025 was A$105 Mil. Zip Co's average shareholder tangible equity for the quarter that ended in Dec. 2025 was A$428 Mil. Therefore, Zip Co's annualized Return-on-Tangible-Equity for the quarter that ended in Dec. 2025 was 24.44%.
The historical rank and industry rank for Zip Co's Return-on-Tangible-Equity or its related term are showing as below:
ASX:ZIP'
s Return-on-Tangible-Equity Range Over the Past 10 Years
Min: -1143.11 Med: -155.66 Max: 29.88
Current: 25.87
During the past 13 years, Zip Co's highest Return-on-Tangible-Equity was 29.88%. The lowest was -1,143.11%. And the median was -155.66%.
ASX:ZIP's Return-on-Tangible-Equity is ranked better than 89.9% of 525
companies
in the Credit Services industry
Industry Median: 7.01
vs ASX:ZIP: 25.87
Zip Co (ASX:ZIP) Return-on-Tangible-Equity Explanation
Return-on-Tangible-Equity measures the rate of return on the ownership interest (shareholder's tangible equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' tangible equity (shareholders equity minus intangibles). Return-on-Tangible-Equity shows how well a company uses investment funds to generate earnings growth. Return-on-Tangible-Equitys between 15% and 20% are considered desirable.
Be Aware
Net Income is used.
Because a company can increase its Return-on-Tangible-Equity by having more financial leverage, it is important to watch the leverage ratio when investing in high Return-on-Tangible-Equity companies. Like Return-on-Tangible-Asset, Return-on-Tangible-Equity is calculated with only 12 months data. Fluctuations in company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Asset light businesses require very few assets to generate very high earnings. Their Return-on-Tangible-Equitys can be extremely high.
Zip Co Return-on-Tangible-Equity Related Terms
Zip Co Return-on-Tangible-Equity Historical Data
* Premium members only.
The historical data trend for Zip Co's Return-on-Tangible-Equity can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
ASX:ZIP vs V, MA, AXP: Return-on-Tangible-Equity Comparison
For the Credit Services subindustry, Zip Co's Return-on-Tangible-Equity, along with its competitors' market caps and Return-on-Tangible-Equity data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Zip Co Return-on-Tangible-Equity vs Credit Services Industry
For the Credit Services industry and Financial Services sector, Zip Co's Return-on-Tangible-Equity distribution charts can be found below:
* The bar in red indicates where Zip Co's Return-on-Tangible-Equity falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
In the calculation of annual Return-on-Tangible-Equity, the net income of the last fiscal year and the average total shareholder tangible equity over the fiscal year are used. In calculating the quarterly data,
the net income data used here is two times the semi-annual (Dec. 2025) net income data.
Return-on-Tangible-Equity is displayed in the 10-year financial page.
What does a Return-on-Tangible-Equity of 24.44% mean?
Zip Co (ASX:ZIP) has a Return-on-Tangible-Equity of 24.44% as of Dec. 2025. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on Zip Co and its competitors. According to the industry distribution chart, Zip Co ranks #53 out of 525 companies in the Credit Services industry, placing it in the top 10.1%.
Is Zip Co's Return-on-Tangible-Equity too high?
Zip Co's current Return-on-Tangible-Equity is 24.44%. The Credit Services industry median Return-on-Tangible-Equity is 7.01. Zip Co's value of 24.44% is 248.6% above this industry median. Based on the distribution chart, Zip Co ranks #53 out of 525 companies in the Credit Services industry, which is in the top quartile — a strong position relative to peers. Overall, Zip Co has a GF Score™ of 62/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Zip Co's Return-on-Tangible-Equity compare to V and MA?
According to the Credit Services industry distribution chart, Zip Co ranks #53 out of 525 companies for Return-on-Tangible-Equity. This places Zip Co in the top 10% of its industry — outperforming the majority of peers. The industry median Return-on-Tangible-Equity is 7.01. Zip Co's value of 24.44% is 248.6% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Return-on-Tangible-Equity for a Credit Services company?
The median Return-on-Tangible-Equity among Credit Services companies is 7.01, based on 525 companies in the industry. Companies in the top quartile (top 25%) have a Return-on-Tangible-Equity significantly above this median, while those in the bottom quartile fall well below. However, Return-on-Tangible-Equity should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Zip Co's current Return-on-Tangible-Equity of 24.44% is 248.6% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Return-on-Tangible-Equity mean?
A high Return-on-Tangible-Equity can signal that a stock is expensive relative to its fundamentals. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on Zip Co and its competitors. For the Credit Services industry, the median Return-on-Tangible-Equity is 7.01 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Zip Co's current Return-on-Tangible-Equity is 24.44%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Zip Co stock overvalued right now?
Based on GuruFocus' analysis, Zip Co (ASX:ZIP) is currently considered Significantly Overvalued. The stock's GF Value™ is A$2.07, compared to a current price of A$3.24 — trading 56.5% above its estimated fair value. The current Return-on-Tangible-Equity is 24.44% and 248.6% above the Credit Services industry median of 7.01. Zip Co's overall GF Score™ is 62/100 with 7 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Return-on-Tangible-Equity calculated?
Return-on-Tangible-Equity is calculated from a company's financial statements. For Zip Co (ASX:ZIP), the current Return-on-Tangible-Equity is 24.44% as of Dec. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Zip Co (ASX:ZIP) Overvalued in 2026?
Based on GuruFocus' analysis, Zip Co stock appears to be overvalued.
The current stock price of A$3.24 is trading 56.5% above its estimated GF Value™ of A$2.07.
GuruFocus considers Zip Co to be Significantly Overvalued.
Key valuation signals for ASX:ZIP:
Return-on-Tangible-Equity: 24.44%
GF Value™: A$2.07 vs. price of A$3.24 (56.5% above fair value)
Industry Position: 248.6% above the Credit Services median (#53 of 525)
No single metric tells the full story. See the ASX:ZIP stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Zip is a credit provider operating two segments: Australia and New Zealand, and the US. Founded in Australia in 2013, it has over 6 million active customers and partners with over 85,000 merchants. In Australia, Zip positions itself as a credit card alternative, with several revolving credit products. Customers can carry the balance over time with a monthly fee and set their own repayment schedule. The US and New Zealand offering is a far more vanilla BNPL offering: Pay-in-4 in New Zealand and Pay-in-Z in the US, where customers pay back in fixed instalments. The US segment is built on the 2020 acquisition of QuadPay and has recently become Zip's largest and fastest-growing segment.
62GF Score
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