company background image
XRO

Xero ASX:XRO Stock Report

Last Price

AU$77.01

Market Cap

AU$11.5b

7D

-6.3%

1Y

-44.0%

Updated

03 Jul, 2022

Data

Company Financials +
XRO fundamental analysis
Snowflake Score
Valuation2/6
Future Growth4/6
Past Performance0/6
Financial Health2/6
Dividends0/6

XRO Stock Overview

Xero Limited, together with its subsidiaries, operates as a software as a service company in New Zealand, Australia, the United Kingdom, and internationally.

Rewards

Earnings are forecast to grow 42.49% per year

Risk Analysis

No risks detected for XRO from our risk checks.

Xero Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Xero
Historical stock prices
Current Share PriceAU$77.01
52 Week HighAU$156.65
52 Week LowAU$72.53
Beta1.02
1 Month Change-10.07%
3 Month Change-25.49%
1 Year Change-44.03%
3 Year Change21.72%
5 Year Change216.39%
Change since IPO1,618.97%

Recent News & Updates

Jun 02
Should You Investigate Xero Limited (ASX:XRO) At AU$84.78?

Should You Investigate Xero Limited (ASX:XRO) At AU$84.78?

While Xero Limited ( ASX:XRO ) might not be the most widely known stock at the moment, it saw a decent share price...

May 17
Does This Valuation Of Xero Limited (ASX:XRO) Imply Investors Are Overpaying?

Does This Valuation Of Xero Limited (ASX:XRO) Imply Investors Are Overpaying?

In this article we are going to estimate the intrinsic value of Xero Limited ( ASX:XRO ) by estimating the company's...

May 02
Xero (ASX:XRO) Might Have The Makings Of A Multi-Bagger

Xero (ASX:XRO) Might Have The Makings Of A Multi-Bagger

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key...

Shareholder Returns

XROAU SoftwareAU Market
7D-6.3%-3.2%-0.5%
1Y-44.0%-26.4%-12.2%

Return vs Industry: XRO underperformed the Australian Software industry which returned -26.4% over the past year.

Return vs Market: XRO underperformed the Australian Market which returned -12.2% over the past year.

Price Volatility

Is XRO's price volatile compared to industry and market?
XRO volatility
XRO Average Weekly Movement8.1%
Software Industry Average Movement11.4%
Market Average Movement9.9%
10% most volatile stocks in AU Market16.6%
10% least volatile stocks in AU Market4.4%

Stable Share Price: XRO is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: XRO's weekly volatility (8%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
20064,784Steve Vamoshttps://www.xero.com

Xero Limited, together with its subsidiaries, operates as a software as a service company in New Zealand, Australia, the United Kingdom, and internationally. The company offers Xero, an open platform that connects small businesses to a range of solutions, which helps to manage their finances. It also provides Xero mobile app; and accountant/bookkeeper tools, including Xero HQ, Xero Practice Manager, Xero Workpapers, and Xero Cashbook or Xero Ledger.

Xero Fundamentals Summary

How do Xero's earnings and revenue compare to its market cap?
XRO fundamental statistics
Market CapNZ$12.64b
Earnings (TTM)-NZ$9.11m
Revenue (TTM)NZ$1.10b

11.5x

P/S Ratio

-1,387x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
XRO income statement (TTM)
RevenueNZ$1.10b
Cost of RevenueNZ$139.39m
Gross ProfitNZ$957.43m
Other ExpensesNZ$966.55m
Earnings-NZ$9.11m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Nov 10, 2022

Earnings per share (EPS)-0.061
Gross Margin87.29%
Net Profit Margin-0.83%
Debt/Equity Ratio85.6%

How did XRO perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • PEG Ratio

Key Valuation Metric

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

Other financial metrics that can be useful for relative valuation.

XRO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue11.6x
Enterprise Value/EBITDA153.2x
PEG Ration/a

Price to Sales Ratio vs Peers

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

XRO PS Ratio vs Peers
The above table shows the PS ratio for XRO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average12x
WTC WiseTech Global
22.3x17.3%AU$12.3b
TNE Technology One
10.2x10.6%AU$3.4b
ALU Altium
11.9x15.2%AU$3.5b
IRE Iress
3.6x5.5%AU$2.1b
XRO Xero
11.5x16.5%AU$11.5b

Price-To-Sales vs Peers: XRO is good value based on its Price-To-Sales Ratio (11.5x) compared to the peer average (12x).


Price to Earnings Ratio vs Industry

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

Price-To-Sales vs Industry: XRO is expensive based on its Price-To-Sales Ratio (11.5x) compared to the Australian Software industry average (4.2x)


Price to Sales Ratio vs Fair Ratio

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

XRO PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio11.5x
Fair PS Ratio20x

Price-To-Sales vs Fair Ratio: XRO is good value based on its Price-To-Sales Ratio (11.5x) compared to the estimated Fair Price-To-Sales Ratio (20x).


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$77.01) is trading above our estimate of fair value (A$74.17)

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


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate XRO's PEG Ratio to determine if it is good value.


Discover undervalued companies

Future Growth

How is Xero forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


42.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: XRO is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.8%).

Earnings vs Market: XRO is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: XRO is expected to become profitable in the next 3 years.

Revenue vs Market: XRO's revenue (16.5% per year) is forecast to grow faster than the Australian market (5.1% per year).

High Growth Revenue: XRO's revenue (16.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: XRO's Return on Equity is forecast to be low in 3 years time (14.6%).


Discover growth companies

Past Performance

How has Xero performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


51.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: XRO is currently unprofitable.

Growing Profit Margin: XRO is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: XRO is unprofitable, but has reduced losses over the past 5 years at a rate of 51.7% per year.

Accelerating Growth: Unable to compare XRO's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: XRO is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (21.2%).


Return on Equity

High ROE: XRO has a negative Return on Equity (-0.88%), as it is currently unprofitable.


Discover strong past performing companies

Financial Health

How is Xero's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: XRO's short term assets (NZ$1.1B) exceed its short term liabilities (NZ$196.5M).

Long Term Liabilities: XRO's short term assets (NZ$1.1B) do not cover its long term liabilities (NZ$1.1B).


Debt to Equity History and Analysis

Debt Level: XRO has more cash than its total debt.

Reducing Debt: XRO's debt to equity ratio has increased from 0.02% to 85.6% over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Insufficient data to determine if XRO has enough cash runway based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if XRO has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.


Discover healthy companies

Dividend

What is Xero current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Future Dividend Coverage


0.14%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate XRO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate XRO's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if XRO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if XRO's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as XRO has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure


CEO

Steve Vamos (64 yo)

4.25yrs

Tenure

NZ$7,395,000

Compensation

Mr. Steven M. Vamos, also known as Steve, BEng Civil (Hons) is the Chief Executive Officer of Xero Ltd since April 1, 2018. Mr. Vamos was an Independent Non-Executive Director at Telstra Corporation Limite...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD4.57M) is above average for companies of similar size in the Australian market ($USD2.54M).

Compensation vs Earnings: Steve's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: XRO's management team is considered experienced (3.8 years average tenure).


Board Members

Experienced Board: XRO's board of directors are considered experienced (3.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Xero Limited's employee growth, exchange listings and data sources


Key Information

  • Name: Xero Limited
  • Ticker: XRO
  • Exchange: ASX
  • Founded: 2006
  • Industry: Application Software
  • Sector: Software
  • Implied Market Cap: AU$11.514b
  • Shares outstanding: 149.51m
  • Website: https://www.xero.com

Number of Employees


Location

  • Xero Limited
  • Xero One
  • 19-23 Taranaki Street
  • Wellington
  • 6011
  • New Zealand

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/07/03 00:00
End of Day Share Price2022/07/01 00:00
Earnings2022/03/31
Annual Earnings2022/03/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.