Xero Limited (XRO.AX) stock analysis

In our weekly check, Xero Limited is graded B (A to F). Of 23 checks on debt, profit, cash flow and trend: 17 pass, warnings: 3, red flags: 3.

About Xero Limited

Xero Limited is a Technology company (Software - Application), listed on ASX as XRO.AX.

What our checks show for XRO.AX

Red flags

• Operating profit does not cover the interest bill (1x): interest is paid from cash or new debt.
• The price swings a lot: 51.1% annual volatility. Expect large ups and downs.
• The stock has fallen as much as 72% from a peak. Would you have held through that?

Warning signs

• The net margin is only 6.1%: little room if costs rise.
• The stock is still below its previous peak.
• Return on capital (ROCE) is only 5.8%.

Strengths

• The net margin rose by 6.9 points over 5 years, to 6.1%.
• The gross margin is 83.9% and has risen by 11.3 points: pricing power is holding.
• Operating cash flow is 5.99x net profit: the profit arrives as real cash.
• Analysts expect earnings per share to grow about 49.6% a year over the next years.
• Analysts expect revenue to grow about 23.1% a year over the next years.
• Analysts expect the net margin to improve by 5 points from today's 6.1%.

Next earnings report: 2026-11-12

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Questions

What grade does Xero Limited (XRO.AX) have?

In our weekly check, Xero Limited is graded B (A to F). Of 23 checks on debt, profit, cash flow and trend: 17 pass, warnings: 3, red flags: 3. The grade is a risk check, not a buy or sell recommendation.

What are the main risks of XRO.AX stock?

This week's biggest flags for Xero Limited: Weak interest cover, Very volatile, Deep past fall. In total 6 of 23 checks show a warning or a red flag.

What does Xero Limited do?

Xero Limited is a Technology company (Software - Application), listed on ASX as XRO.AX.

When does Xero Limited report earnings next?

The next earnings report is expected on 2026-11-12. We re-run the checks every week, so the grade can change after it.

The grade is a risk check, not a price forecast, and not investment advice. In our 10-year test (S&P 500, 2016-2026), stocks we graded A or B fell more than 30% 2-3 times less often than D or F, without a lower average return.

Updated 2026-10-31

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