XROLF
Xero Limited
$47.09
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 66.8% below fair value
You pay
$47.09
Bear
$79.95
Fair
$141.97
Bull
$218.00
Bear
$79.95
+69.8%
11% stage 1 growth, 11% discount
Fair
$141.97
+201.5%
19% stage 1 growth, 11% discount
Bull
$218.00
+362.9%
25% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (19% base case)
Terminal Value % of EV
46%
Implied Market Multiple
14.2x
Market is pricing in (growth)
4.3%
vs 19.0% base
Summary
Using a two-stage FCF DCF with 19% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $141.97 per share.
Warnings
Financial statements were converted from NZD into USD using NZDUSD at 0.5778 USD per NZD.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions