XRO share price in focus
Xero founder Rod Drury started the company in 2006 in Wellington, New Zealand. He led the company until 2018 and remained on the board until 2023. Today, Xero helps millions of people and businesses manage their accounting and tax obligations across the globe.
The cloud-based accounting software developed by Xero is primarily for accountants and bookkeepers to better service their small business customers.
Through Xero, small business owners and their advisors have access to real-time financial data on any device. Xero provides its core cloud accounting software to customers in New Zealand, Australia, the UK and, over the last few years has been working hard to break into the US market.
RMD shares
Founded in 1989 by Peter Farrell in Australia, ResMed is now headquartered in San Diego, California. The company specializes in medical equipment, offering cloud-connectable continuous positive airway pressure (CPAP) machines to treat obstructive sleep apnea (OSA). Although ResMed is based in the US, its shares are listed on both the NYSE and the ASX.
With over 10,000 employees and operations in more than 140 countries, ResMed has two main business units: Sleep and Respiratory Care, and Software as a Service (SaaS). In the Sleep and Respiratory Care unit, ResMed provides top-of-the-line CPAP machines for sleep apnea, along with non-invasive and invasive ventilation solutions for life-support patients. In the SaaS unit, the company offers software that supports durable medical equipment (DME/HME), which plays a key role in out-of-hospital care.
ResMed’s extensive digital health network, powered by its cloud-connected devices, enables the company to use its industry-leading hardware (such as masks and humidifiers) and SaaS data to generate valuable insights, enhance patient outcomes, and lower overall healthcare costs.
XRO share price valuation
As a growth company, one way to put a broad estimate on the XRO share price could be to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, Xero Ltd shares have a price-sales ratio of 16.82x, compared to its 5-year average of 18.65x, meaning its shares are trading lower than their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of XRO, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
The RMD share price currently trades at a price-sales ratio of 5.10x, which compares to its 5-year long-term average of 8.70x. So, RMD shares are trading lower than their historical average. Don’t forget, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! It’s a good idea to use multiple valuation methods to value a share like Resmed CDI.
