XROLF
Xero Limited
$41.50
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 72.8% below fair value
You pay
$41.50
Bear
$85.80
Fair
$152.33
Bull
$233.86
Bear
$85.80
+106.8%
11% stage 1 growth, 11% discount
Fair
$152.33
+267.0%
19% stage 1 growth, 11% discount
Bull
$233.86
+463.5%
25% stage 1 growth, 11% discount
Adjust Assumptions
19.0%
11.0%
3.0%
Key Value Driver
FCF growth rate (19% base case)
Terminal Value % of EV
46%
Implied Market Multiple
11.7x
Market is pricing in (growth)
1.6%
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 $152.33 per share.
Warnings
Financial statements were converted from NZD into USD using NZDUSD at 0.5670 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