The Zip Co Ltd (ASX: ZIP) share price could be significantly undervalued if it’s able to deliver on its growth potential.

Zip is a rapidly growing buy now, pay later business with its main operations in Australia and the US. It has provided guidance that it intends to exit New Zealand.

The business recently reported its FY26 result which included a number of impressive growth metrics.

Given the guidance the business provided for FY27, the outlook looks promising for several reasons.

Rapid expansion in the US

To buy an ASX growth share, I think we need to see that the company’s core offering has a compelling future.

I think it’s safe to say that Zip is growing rapidly in the US, which is now its biggest source of growth.

In FY26, the US was responsible for around two-thirds of the company’s revenue and that percentage is likely to keep growing. The company’s total revenue grew by 24.7%, with 37.3% revenue growth in the US in Australian dollar terms and just 4.6% revenue growth for ANZ. In US dollar terms, US revenue rose 44.3%.

The US is also the company’s only source of customer growth. During FY26, US active customers rose 9.3% to 4.65 million, while ANZ active customers decreased 8% to 1.88 million. ANZ revenue grew because of transaction growth.

In FY27, Zip is expecting US total transaction value (TTV) growth of more than 30%.

Increasing profit margins

Zip is not just growing its revenue; its profit margins are increasing thanks to operating leverage, allowing the profits to grow much faster than revenue.

The buy now, pay later business reported in FY26 that its total income rose by 24.6% to $1.35 billion, cash gross profit grew by 26.2% to $642.3 million and cash operating profit (EBTDA) jumped 57.9% to $268.9 million.

I’m not expecting Zip’s cash EBITDA to continue growing at that pace forever, given how challenging it is to grow profit as the numbers get bigger.

But, as the company grows, I think its expanding scale and operating leverage will improve profit margins. The company expects its operating margin to rise again in FY27 to between 20% and 22%.

Good Zip share price valuation

At the time of writing, Zip’s share price is valued at 28x FY26 earnings, which I don’t think is very expensive, given its US TTV is expected to grow by at least 30%.

The projection on Commsec suggests the business could grow its earnings per share (EPS) by close to 48% to 13.6 cents in FY27, 17.8 cents in FY28 and 22.4 cents in FY29.

Those EPS forecasts suggest the company is valued at 19x FY27’s estimated earnings at the time of writing. With projections of further profit growth in FY28 and FY29, the company could seem cheap at this level.

The post 3 reasons why the Zip share price could be a great buy appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Dalrymple Bay Infrastructure Ltd (ASX: DBI) share price is in focus after the company posted a 14.2% rise in statutory net profit after tax to $49.2 million and confirmed plans for an 8.5% increase in its full-year distribution.

What did Dalrymple Bay Infrastructure report?

• Terminal Infrastructure Charge (TIC) revenue of $156.5 million, up 3.6% on H1 FY25
• EBITDA of $150.5 million, up 4.7% from H1 FY25
• Statutory net profit after tax of $49.2 million, up 14.2% year on year
• Funds from Operations (FFO) of $92.7 million, up 10.2%
• Q2 FY26 distribution of 6.75 cents per security, with FY27 guidance of 28.62 cents per security (up 8.5%)
• Net debt of $2,012.3 million at 30 June 2026; investment grade balance sheet reaffirmed

What else do investors need to know?

Dalrymple Bay Infrastructure successfully issued a $350 million, five-year fixed rate bond under its new medium-term note program. This is part of its ongoing capital management strategy to diversify funding sources and manage refinancing risk.

The company continues to invest in major sustaining capital projects, with $370.6 million of committed non-expansion capital works in progress, including the Shiploader 1A and Reclaimer 4 projects. These are on track to be added to the regulated asset base by July 2027, potentially boosting future revenue.

Operationally, there were no fatalities, serious injuries, or reportable environmental incidents during the half. The terminal remains fully contracted on a take-or-pay basis through to June 2028, supporting stable cash generation.

What did Dalrymple Bay Infrastructure management say?

Dalrymple Bay Infrastructure CEO and Managing Director Michael Riches said:

H1-26 performance reflects the continued resilience of the business and the consistency of its earnings profile. During the period, we announced TIC guidance for TY-26/27 of $4.02 per tonne, an 8.1% increase on the prior year, demonstrating the value of DBI’s stable and predictable pricing arrangements with customers, the quality of the delivery on its capital program (and consequent NECAP Asset Base additions) and the strength of its business model.

he issuance of Australian Medium-Term Notes during H1-26 has further diversified DBI’s sources of debt funding and reflects DBI’s proactive approach to managing its balance sheet, its refinancing risk and its cost of capital. This enhances DBI’s financial flexibility and supports the funding of committed NECAP projects while maintaining an investment-grade credit profile.

Distributions also continue to grow, with guidance issued for TY-26/27 of 28.62 cents per security, payable in quarterly instalments. This represents an 8.5% increase on TY-25/26 distributions and reflects the continued strength and predictability of DBI’s cashflows.

DBI remains focused on growing and managing the business to create long-term value for securityholders. Our objective remains to deliver sustainable growth in securityholder returns over time, and the first half of 2026 demonstrates our continued progress against that commitment.

What’s next for Dalrymple Bay Infrastructure?

Looking ahead, Dalrymple Bay Infrastructure aims to deliver further organic revenue growth through the inclusion of completed capital projects in its asset base and completion of the Shiploader 1A and Reclaimer 4 builds. The company reaffirmed its medium-term distribution growth target of 3–7% per annum, subject to market conditions.

Management is also exploring opportunities for diversification, ongoing refinancing to manage debt costs, and environmental and sustainability initiatives across the terminal. With stable long-term contracts in place, the business plans to continue its focus on supporting future cashflow and shareholder distributions.

Dalrymple Bay Infrastructure share price snapshot

The Dalrymple Bay Infrastructure share price has outperformed the S&P/ASX 200 index (ASX: XJO) over the last 12 months with a gain of almost 11%.

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The post Dalrymple Bay Infrastructure posts stronger profit and higher distribution appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The SkyCity Entertainment Group Ltd (ASX: SKC) share price is in the spotlight today after the company confirmed it had received and rejected two conditional takeover proposals – one from Oaktree Capital Management at NZ$0.70 per share, and another party at NZ$0.75 – after judging they did not adequately reflect SkyCity’s value.

What did SkyCity Entertainment Group report?

• Company received two conditional, non-binding indicative takeover offers for all shares at NZ$0.70 and NZ$0.75 per share
• Both offers required extensive due diligence and other substantial conditions
• SkyCity’s board unanimously rejected both proposals as not reflecting true company value
• Continues to progress $275–300 million asset monetisation program, including sale of investment properties
• Operating model reset underway, aiming for $30 million in benefits for FY27, growing to $70 million in FY28

What else do investors need to know?

The two takeover proposals were conditional on matters such as at least 8 weeks of due diligence, arranging debt financing, securing board and shareholder approval, and several regulatory and structural hurdles. The board was also asked to provide exclusivity and not change SkyCity’s existing asset or debt arrangements during talks.

After careful review with management and advisers, SkyCity’s board found the proposals undervalued the business and that their conditions could disrupt ongoing operations. The company advised both interested parties it would only proceed if improved terms were presented, but no revised offers were received.

What’s next for SkyCity Entertainment Group?

The company says it remains focused on its current strategy, including completing its asset sales program—already securing unconditional agreements for the 99 Albert Street and Victoria Street properties, as well as a non-binding agreement for its Grand Hotel. The board is also progressing a group-wide operating model reset and undertaking a strategic review of SkyCity Adelaide following a recent agreement with the South Australian regulator.

By sticking to its strategic priorities, SkyCity aims to strengthen its financial footing and unlock additional value for shareholders over the coming years.

SkyCity Entertainment Group share price snapshot

Over the past 12 months, SkyCity shares have declined 11%, trailing the All Ordinaries Index (ASX: XAO), which has risen 1% over the same period.

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The post SkyCity rejects takeover offers, focuses on strategy and asset sales appeared first on The Motley Fool Australia.

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• SkyCity shares on watch as FY26 profit falls but cost-out strategy advances

Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.