Xero Limited

ASX:XRO Stock Report

Market Cap: AU$27.0b

Xero Valuation

Is XRO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

0/6

Valuation Score 0/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of XRO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: XRO (A$176.88) is trading above our estimate of fair value (A$150.92)

Significantly Below Fair Value: XRO is trading above our estimate of fair value.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for XRO?

Key metric: As XRO is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for XRO. This is calculated by dividing XRO's market cap by their current earnings.
What is XRO's PE Ratio?
PE Ratio138.3x
EarningsNZ$215.65m
Market CapNZ$29.82b

Price to Earnings Ratio vs Peers

How does XRO's PE Ratio compare to its peers?

The above table shows the PE ratio for XRO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average98.9x
WTC WiseTech Global
175.2x23.8%AU$46.0b
TNE Technology One
81.3x14.1%AU$9.6b
OCL Objective
52.7x6.3%AU$1.7b
IRE Iress
86.2x29.6%AU$1.7b
XRO Xero
138.3x26.4%AU$27.0b

Price-To-Earnings vs Peers: XRO is expensive based on its Price-To-Earnings Ratio (138.3x) compared to the peer average (98.9x).

Price to Earnings Ratio vs Industry

How does XRO's PE Ratio compare vs other companies in the AU Software Industry?

1 CompanyPrice / EarningsEstimated GrowthMarket Cap
IRI Integrated Research
3.9x-20.4%US$69.09m
No more companies available in this PE range
XRO 138.3xIndustry Avg. 63.8xNo. of Companies2PE020406080100+
1 CompanyEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: XRO is expensive based on its Price-To-Earnings Ratio (138.3x) compared to the Australian Software industry average (63.8x).

Price to Earnings Ratio vs Fair Ratio

What is XRO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

XRO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio138.3x
Fair PE Ratio75.8x

Price-To-Earnings vs Fair Ratio: XRO is expensive based on its Price-To-Earnings Ratio (138.3x) compared to the estimated Fair Price-To-Earnings Ratio (75.8x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst XRO forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentAU$176.88
AU$185.96
+5.1%
14.6%AU$220.13AU$89.97n/a16
Nov ’25AU$148.21
AU$157.91
+6.5%
16.1%AU$199.17AU$84.88n/a16
Oct ’25AU$150.20
AU$155.20
+3.3%
16.1%AU$200.28AU$85.35n/a16
Sep ’25AU$142.84
AU$153.21
+7.3%
14.5%AU$184.54AU$86.22n/a16
Aug ’25AU$140.25
AU$149.30
+6.5%
14.6%AU$179.62AU$83.92n/a16
Jul ’25AU$134.70
AU$147.57
+9.6%
15.0%AU$182.40AU$84.11n/a16
Jun ’25AU$135.00
AU$147.54
+9.3%
13.9%AU$180.41AU$84.95n/a16
May ’25AU$123.18
AU$129.88
+5.4%
17.2%AU$156.04AU$75.80n/a16
Apr ’25AU$133.32
AU$130.21
-2.3%
16.8%AU$156.20AU$76.63n/a16
Mar ’25AU$134.93
AU$124.90
-7.4%
17.8%AU$158.84AU$77.99n/a16
Feb ’25AU$109.38
AU$118.77
+8.6%
14.5%AU$142.15AU$78.63n/a16
Jan ’25AU$112.30
AU$117.64
+4.8%
14.7%AU$141.19AU$78.10n/a16
Dec ’24AU$101.13
AU$115.21
+13.9%
18.5%AU$141.85AU$63.80n/a17
Nov ’24AU$107.06
AU$121.42
+13.4%
18.3%AU$147.86AU$62.67AU$148.2117
Oct ’24AU$112.43
AU$116.37
+3.5%
19.6%AU$145.05AU$62.78AU$150.2017
Sep ’24AU$123.86
AU$115.29
-6.9%
19.0%AU$145.98AU$63.18AU$142.8417
Aug ’24AU$123.88
AU$113.20
-8.6%
18.5%AU$147.06AU$63.65AU$140.2517
Jul ’24AU$118.93
AU$111.72
-6.1%
17.6%AU$132.45AU$63.23AU$134.7017
Jun ’24AU$112.03
AU$108.24
-3.4%
18.1%AU$129.30AU$63.91AU$135.0017
May ’24AU$92.47
AU$98.10
+6.1%
15.7%AU$126.41AU$59.82AU$123.1816
Apr ’24AU$89.42
AU$96.00
+7.4%
14.5%AU$115.98AU$59.87AU$133.3216
Mar ’24AU$77.46
AU$83.13
+7.3%
19.3%AU$120.75AU$54.00AU$134.9316
Feb ’24AU$76.86
AU$83.05
+8.1%
19.3%AU$120.90AU$54.07AU$109.3816
Jan ’24AU$70.27
AU$85.97
+22.3%
20.1%AU$123.63AU$55.63AU$112.3016
Dec ’23AU$74.99
AU$84.22
+12.3%
20.3%AU$122.23AU$55.00AU$101.1317
Nov ’23AU$78.28
AU$95.39
+21.9%
22.1%AU$133.87AU$54.92AU$107.0617

Analyst Forecast: Target price is less than 20% higher than the current share price.

Discover undervalued companies

Bigtincan Holdings

AU$147.9m

Develops software for sales enablement market in Australia, the United States, and internationally.

BTH

AU$0.18

7D

2.9%

1Y

20.0%

Novatti Group

AU$13.0m

Operates as a fintech company worldwide.

NOV

AU$0.032

7D

-3.0%

1Y

-66.0%

COSOL

AU$151.7m

Provides information technology services in the Asia Pacific, North America, Europe, the Middle East, Africa, and internationally.

COS

AU$0.85

7D

-11.4%

1Y

0.6%