Azzet reports on three stocks with market-moving updates to share today.
Zip Co rallies on two market updates
Shares in Zip Co (ASX: ZIP) were up around 18.9% by 2:10 pm AEST (4:10 am GMT) after the buy now pay later (BNPL) operator revealed plans to potentially dual-list its shares on the Nasdaq (as well as the ASX), to make the stock more attractive to institutional buyers.
It’s understood that offshore institutional investors currently account for around 16% of Zip Co's issued capital.
What also warmed investors to Zip Co today were revelations that the BNPL stock had beaten its own guidance on FY25 earnings.
Due largely to standout performance in the U.S., the BNPL announced a hefty jump in profit to $79.9 million compared with $5.6 million in FY24.
Cash earnings for FY25 of $170.3 million were 147% higher than FY24, while total volume across its payment platform of $13.1 billion was up 30.3%.
Total transaction volumes lifted 30% to $13.9 billion, while active customers rose to 6.3 million – over half of which are in the U.S. market.
Commenting on today’s update, CEO Cynthia Scott told the market that FY25 was a defining year, with revenue up 23% to $1.07 billion, with more than half of that coming from its U.S. operations where revenue rose 46%.
“We achieved several milestones including delivering over $1 billion in total income and our U.S. business generated over US$100m of cash earnings,” she said.
“Disciplined execution and strong unit economics underpinned our performance, with Group operating margin almost doubling within 12 months to 15.8%.”
Other key FY25 numbers announced today:
- Total cash operating costs of $338 million were up 10.2% year on year.
- Operating margin expanded from 7.9% in FY24 to 15.8%.
- Net bad debts at 1.5% of TTV.
- 5.5k merchants on Zip’s platform (up 7.9% vs FY24).
- U.S. TTV up 41.6% year on year to US$6 billion.
- The ANZ business returned to year-on-year TTV growth, up 5.5%.
Outlook
The company also flagged a robust outlook for FY26, with the group revenue margin expected to hit around 8%, while the group cash net transaction margin was upgraded to between 3.8% and 4.2%.
While the group operating margin was upgraded to between 16% and 19%, the company also guided to U.S TTV growth above 35% (in USD).
Group cash earnings as a percentage of TTV is also expected to be greater than 1.3%.
“We are well placed to deliver on our refreshed FY26 guidance and next horizon of growth, as we execute our strategic priorities of growth and engagement, product innovation, and platforms for scale, and fulfil our purpose of unlocking financial potential, together,” said Scott.
The company has also strengthened its balance sheet having repaid all corporate debt and is actively progressing a $50 million on-market share buyback program.
Back in June Ord Minnett retained their buy rating on this BNPL's shares with an increased price target of $3.40.
With the stock trading at $3.81 today it may be in for another re-rating following today’s update.
Zip Co has a market cap of $4.9 billion; the share price is up 76% in one year and up 17% in the last week.
The stock is in a strong bullish trend confirmed by multiple indicators.
Consensus is Strong Buy.
Webjet Group flies on news of buyout and buyback
Shares in Webjet Group (ASX: WJL) were up around 2.1% after the online travel agent spin-off from the hotel booking aggregator business, now Web Travel Group (ASX: WEB), told the market of growth-by-acquisition plans to capture a greater share of the business travel market.
The company will use surplus capital to buy a small Melbourne-based travel company, Locomote, and return $25 million to shareholders via an online buyback.
Webjet expects Locomote to accelerate growth in its more lucrative business travel segment.
Locomote, which operates a purpose-built platform with its own mid-office, broad customer base covering businesses of all sizes, and sales pipeline, had a total transaction value (TTV) of around $70 million in FY25.
Webjet Group plans to rebrand Locomote as Webjet Business Travel, and all current Locomote staff are expected to remain with the business, including Co-Founder & CEO, Ross Fastuca, COO, Tass Messinis, and CTO, Mario Rogic.
The acquisition is expected to be completed in the second half of FY26 and is forecast to contribute positively to FY26 revenue and reduce underlying earnings by around $600,000 - $900,000.
“Webjet Group currently services business travellers in an unstructured capacity and this acquisition will allow us to serve customers in a more structured way, particularly as their needs grow more complex,” said Webjet Group’s CEO Katrina Barry.
“The acquisition of Locomote, with its secure purpose-built technology, positions us to swiftly provide a distinct Business Travel offering, avoiding any lengthy development phase and at a lower overall cost.”
Today’s news provides welcome relief for long-suffering shareholders who have seen the stock’s share price tread water since last year’s speculation that BGH Capital and Garry Weiss were planning a takeover.
Since then there’s been mounting speculation that listed travel rival, Helloworld Travel (ASX: HLO) – which now owns around 10% of Webjet Group - could join forces with BGH Capital to take the company private.
The decision by Webjet Group to acquire Locomote may also galvanise interest in potential acquirers, with the acquisition enabling the launch of a stand-alone Webjet Business Travel offering three years earlier and at a lower cost than building in-house.
Meanwhile, Webjet Group’s FY26 underlying earnings are expected to be broadly in line with FY25 and will be weighted to the second half.
For the 12 months to 31 March 2025, the company delivered underlying earnings of $39.4 million; underlying net profit of $20.9 million; and net cash $118.1 million.
Webjet Group has a market cap of $379 million; the share price is up 20% in one year and up 5% in the last week.
The stock is in a strong bullish trend, confirmed by multiple indicators.
Consensus is Moderate Buy.
Guzman y Gomez tumbles after posting maiden FY profit
Shares in Guzman y Gomez (GYG) were trading 22.5% lower after the fast-casual Mexican food chain announced record financial results for the year ending June 30, highlighted by global network sales exceeding $1 billion for the first time.
The share price is now worth half the $45.22 it was trading at in late February despite today declaring a maiden FY25 profit of $14.5 million, compared to a loss of $13.8 million in FY24.
Within a string of encouraging headline results announced today was a 12.6c per share dividend, which will be paid on September 30.
Given that there are Sell, Buy and Hold broker recommendations on the stock, the market is clearly at odds over not only its expansion plans, but also its valuation and financial performance.
For example, while Goldman Sachs had a Sell rating with a price target of around $33.60, citing concerns about the company's ambitious expansion plans and high valuation relative to its peers, Morgan Stanley maintained a Buy due to the company's strong unit economics, market growth, and ability to scale.
At face value, the company’s scalability appears strong, with FY25 global network sales up 23% to $1.18 billion, which propelled a 45.5% jump in earnings to $65.1 million on a pro forma basis.
During the year, the company expanded its footprint by opening 39 new restaurants worldwide, with 32 in Australia, four in Singapore, one in Japan, and two in the U.S., bringing its total global network to 256 restaurants.
The company’s established markets also performed strongly, same store sales growth across Australia, Singapore and Japan reaching 9.6%.
Underlying earnings in this segment rose 45% to $66 million.
Looking ahead to FY26, the company expects to open 32 new restaurants in Australia and expects its Australian segment underlying earnings margin to expand from 5.7% in FY25 to between 5.9 and 6.3%.
What could have derailed investor sentiment towards the stock today is the delicate state of the U.S. market, where all fast-service food offerings have struggled due to the state of the declining U.S. economy.
However, the company’s U.S. operations showed improved performance towards the end of the year, with fourth-quarter comparable sales up 2.8% and total network sales increasing by 57.3%.
Two new U.S. restaurants – one drive-thru and one strip – are planned in FY26, including Des Plaines, which opened in July, and Bucktown, which is due to open in 1H26.
This investment, plus the expanded above restaurant infrastructure, is expected to offset ongoing improvements in the profitability of existing restaurants, and as a result the company guided to slightly increased U.S. losses in FY26.
Commenting on today’s update, Steven Marks, founder and co-CEO, managed to avoid specific reference to the U.S. market and chose to focus on what’s happening in the Australian market.
“With 98 locations in our Australian pipeline and an incredible real estate team our expansion plans have never been stronger,” he said.
“Our franchise partners have also delivered another incredible year. Their passion, hustle, and commitment are at the heart of GYG’s success. With a median ROI of 50%, they’re not just building amazing businesses, they’re helping GYG deliver on our mission to become the best and biggest restaurant company in the world.”
Guzman y Gomez has a market cap of $2.3 billion; the share price is down 31% in one year and down 43% year to date.
The stock’s shares appear to be weak with little demand from investors.
Consensus is Hold.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
