XRO share price in focus
Founded in 2006 in Wellington, New Zealand, by Rod Drury, Xero has grown into a global leader in cloud-based accounting software. Under Drury’s leadership until 2018 and under a new CEO since, the company has expanded to employ over 3,000 people and now serves millions of subscribers worldwide.
Xero’s “beautiful accounting software” is designed primarily for accountants and bookkeepers, enabling them to better serve small business clients. It offers real-time financial data accessible on any device, empowering small business owners and their advisors with up-to-date insights.
Xero’s core cloud accounting platform is widely used in New Zealand, Australia, the UK, and, to a lesser extent, the United States.
GMG shares
Founded in 1989, Goodman Group is a leading global property group that owns, develops, and manages real estate assets across multiple continents.
As the largest ASX-listed property group, Goodman operates in key markets including Australia, New Zealand, the UK, Japan, the US, and Brazil.
The company focuses primarily on large-scale logistics facilities, warehouses, and business and office parks. Goodman’s mission is to foster long-term, mutually beneficial relationships with its customers while delivering high-quality, sustainable assets.
XRO & GMG share price valuation
As a growth company, some of the trends we might investigate from XRO include revenue growth, profit growth, and return on equity (ROE). These measures can indicate the growth rates and prospects of the company, as well as their ability to generate returns from their assets.
Since 2021, XRO has grown revenue at a rate of 26.4% per year to reach $1,714m in FY24. Over the same stretch of time, net profit has increased from -$9m to $175m. As for ROE, XRO last reported a ROE of 14.3%.
Since GMG is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In FY24, Goodman Group reported a debt/equity ratio of 21.2%, meaning the company has more equity than debt.
As for dividends, since 2020 GMG has paid an average dividend yield of 1.3% per year.
Finally, in FY24, GMG reported an ROE of 0.1%. For a mature business you’re generally looking for an ROE of more than 10%, so GMG’s returns are a bit less than what we’d expect.
Keep in mind that these are only a small selection of metrics. We don’t have enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
