ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Zip Co's annualized return on capital (ROC %) for the quarter that ended in Dec. 2025 was 9.07%.
As of today (2026-06-30), Zip Co's WACC % is 20.79%. Zip Co's ROC % is 10.23% (calculated using TTM income statement data).
Zip Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Zip Co (ASX:ZIP) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Zip Co's WACC % is 20.79%. Zip Co's ROC % is 10.23% (calculated using TTM income statement data).
Zip Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Zip Co ROC % Related Terms
Zip Co ROC % Historical Data
* Premium members only.
The historical data trend for Zip Co's ROC % 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.
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2025) data.
The tax rate is limited to between 0% and 100%.
* 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.
Zip Co (ASX:ZIP) has a ROC % of 9.07% as of Dec. 2025. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Zip Co and its competitors.
Is Zip Co's ROC % too high?
Zip Co's current ROC % is 9.07%. The Credit Services industry median ROC % is 1.98. Zip Co's value of 9.07% is 358.1% above this industry median. 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 ROC % compare to V and MA?
Zip Co's ROC % of 9.07% can be compared against companies in the Credit Services industry. The industry median ROC % is 1.98. Zip Co's value of 9.07% is 358.1% 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 ROC % for a Credit Services company?
The median ROC % among Credit Services companies is 1.98, based on 417 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Zip Co's current ROC % of 9.07% is 358.1% 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 ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Zip Co and its competitors. For the Credit Services industry, the median ROC % is 1.98 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Zip Co's current ROC % is 9.07%. 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 ROC % is 9.07% and 358.1% above the Credit Services industry median of 1.98. 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 ROC % calculated?
ROC % is calculated from a company's financial statements. For Zip Co (ASX:ZIP), the current ROC % is 9.07% 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:
ROC %: 9.07%
GF Value™: A$2.07 vs. price of A$3.24 (56.5% above fair value)
Industry Position: 358.1% above the Credit Services median
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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