Zip Co Ltd (ASX: ZIP) shares are charging higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed yesterday trading for $2.47. In early afternoon trade on Tuesday, shares are swapping hands for $2.60 apiece, up 5.3%.
For some context, the ASX 200 is up 0.4% at this same time.
With today's intraday gains factored in, Zip shares are up 17.7% over 12 months. And brave investors who waded in and bought the BNPL stock when it hit one-year closing lows of $1.19 on 7 April last year will be sitting on gains of 118.5%.
That's enough to turn an $8,000 investment into $17,479.
And according to Ord Minnett's Tony Paterno, the ASX 200 stock is well-placed to deliver more outperformance in the months ahead (courtesy of The Bull).
Image source: Getty Images
Should you buy Zip shares today?
"This digital financial company operates in Australia, New Zealand and the United States," said Paterno.
Commenting on the first reason he has a buy recommendation on Zip shares, Paterno said:
There's a lot to like about this buy now, pay later platform provider's first quarter result in fiscal year 2026. Total transaction volume (TTV) growth in the US was up 47.2% and revenue was up 51.2%.
And the full-year outlook for TTV growth marks the second reason the ASX 200 BNPL stock is a buy.
"Consequently, Zip's management has increased TTV guidance in the US to more than 40% in full year 2026, which is up from 35%," Paterno said.
And the third reason you might want to buy Zip stock today is the company's strong, and potentially growing profit margins.
According to Paterno:
Margins were strong across the board, highlighted by an operating margin of 19.5% in the first quarter, which is above the guidance range of between 16% and 19% for full year 2026. Margins are usually stronger in the second half.
What's been happening with the ASX 200 BNPL stock?
The last price-sensitive news for Zip shares was the company's Q1 FY 2026 results, released on 20 October.
Atop the impressive TTV and revenue growth that Paterno mentioned above, Zip achieved record cash earnings before taxes, depreciation, and amortisation (EBTDA) of $62.8 million, up 98.1% year on year.
Commenting on those record quarterly earnings on the day, Zip's Cynthia Scott said, "This was underpinned by strong unit economics, material operating leverage and disciplined execution, driving a significant increase in operating margin to 19.5%."
