Xero Limited, together with its subsidiaries, provides platform for online accounting and business services to small businesses and their advisors worldwide. More info.
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (NZD, Millions)||NZ$-80.58||NZ$-35.19||NZ$26.82||NZ$61.48||NZ$71.32|
|Source||Analyst x3||Analyst x3||Analyst x3||Analyst x2||Extrapolated @ (16%, capped from 46.15%)|
Discounted (@ 9.5%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = NZ$71 × (1 + 2.76%) ÷ (9.5% – 2.76%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
NZ$696 = NZ$6 + NZ$691
Value = Total value / Shares Outstanding (NZ$696 / 135)Discount to Share Price
Value per share (NZD): NZ$5.14Exchange rate NZD/AUD = 0.892
Value per share (AUD): A$4.59
Current discount (share price of A$30.46): -564.31%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 9.5% = 2.76% + (0.931 * 7.24%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (NZ$4,626,027,779).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.931 = 0.931 (1 + (1- 30%) (0%))
Levered Beta used in calculation = 0.931
If the companies market cap is in a different currency to that of the listing the equivalent number of shares outstanding must be calculated.
Market Cap (NZD): NZ$4,626,027,779Exchange rate NZD/AUD = 1.121
Market Cap (AUD): A$4,124,880,186
Equivalent shares outstanding: A$4,124,880,186 / A$30.460000 = A$135
Mr. Rod Drury, BCA, HFNZCS is a Co-Founder of Xero Limited and serves as its Chief Executive Officer and Executive Director. Mr. Drury Co-Founded Context Connect, LLC in 2000 and served as its Chief Technology Officer. Mr. Drury served as Chief Executive Officer of Aftermail Limited. He serves as Chairman of PlanHQ Ltd. Mr. Drury serves as an Independent Director of Xero Live Limited (UK), Xero Live Pty Limited (Australia) and Xero Trustee Limited. He serves as a Director of Pacific Fibre Limited. He serves as a Member of Technical Advisory Board at 2 Ignite Fund. He served as an Independent Director at NZX Limited from November 18, 2009 to May 3, 2013. He served as a Director of Context Connect, LLC. Mr. Drury is the winner of NZX Entrepreneur of the Year Award. He holds a Bachelor of Commerce and Administration (BCA) from Victoria University, majoring in Accounting.
Average tenure of the Xero management team in years:
Average tenure of the Xero board of directors in years:
Xero Limited, together with its subsidiaries, provides platform for online accounting and business services to small businesses and their advisors worldwide. It offers Xero, an online or cloud-based accounting software that automates various manual processes. The company offers accountant/bookkeeper tools, such as Xero HQ, Xero Practice Manager, Xero Workpapers, and Xero Cashbook/Ledger; and Xero mobile app. It serves various businesses, such as retail, high tech, non-profit, legal, hospitality, cafés, startups, construction, creatives, e-commerce, and small business. Xero Limited was founded in 2006 and is headquartered in Wellington, New Zealand.
19-23 Taranaki Street,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NZSE||XRO||Ordinary Shares||New Zealand Stock Exchange||NZ||NZD||05. Jun 2007|
|OTCPK||XROL.F||Ordinary Shares||Pink Sheets LLC||US||USD||05. Jun 2007|
|DB||0XE||Ordinary Shares||Deutsche Boerse AG||DE||EUR||05. Jun 2007|
|ASX||XRO||Ordinary Shares||Australian Securities Exchange||AU||AUD||05. Jun 2007|
|CHIA||XRO||Ordinary Shares||Chi-X Australia||AU||AUD||05. Jun 2007|
|Sector:||Software and Services|