Xro - xero

[Ginger_steps_]

http://www.forbes.com/growth-companies/list/#tab:rank

Niiiice! Also good to see Xero signing up more global parters such as BDO South Africa recently - looking forward to the big data insights and US payroll rollout so Xero can pay some more attention to global sales.

[Xirr]

http://www.forbes.com/growth-companies/list/#tab:rank

"Companies with a current market cap above the NPV of cash flows have an innovation premium built into their stock."

*Clap clap* Xero just won the most overvalued company award. That isnt a surprise.

[Stranger_Danger]

"Companies with a current market cap above the NPV of cash flows have an innovation premium built into their stock."

*Clap clap* Xero just won the most overvalued company award. That isnt a surprise.

For the second year running wasn't it? After the share price had halved?

[Santiago]

"Companies with a current market cap above the NPV of cash flows have an innovation premium built into their stock."

*Clap clap* Xero just won the most overvalued company award. That isnt a surprise.

Well you could see it that way, and I guess the whole profit argument had been done to death on this forum while overseas buyers come in and own it. And I suppose I could say that if you want your steady profit and 1c dividend then go and buy power co shares or purchase a corner dairy or something. But actually the reason why I posted the link was because isn't it kind of cool that a NZ company is taking first spot 2 years running? Anyone feel like, just a little bit, proud or some sense of positivity rather than the general loathing that we've been seeing lately? Great branding for Xero, for NZ, and maybe just a little reminder to the haters that it is not all about profit and nothing else when you see it from the perspective of those that aren't fortunate enough to live on these fair lands. Indeed those fools over in the U.S. (where they know little of business and investing by the looks of things given the amount of U.S. money that has been channeled into this loser company recently) actually concern themselves with the concept of potential. Ie- to look forward and see what could be rather than look back and see what has been. Great to see Xero still leading the list.

[Xirr]

From Matt Nippert's twitter feed.

@MattNippert: Creativity in business over-rated: "Fortune named Enron 'America's Most Innovative Company' for 6 consecutive years." http://t.co/xibvAK27O9

Hey I used to be one of Xero's biggest cheerleaders back when it was a buck and change but I'm going to call a meaningless award when I see it.

[lastmoa]

Well you could see it that way, and I guess the whole profit argument had been done to death on this forum while overseas buyers come in and own it. And I suppose I could say that if you want your steady profit and 1c dividend then go and buy power co shares or purchase a corner dairy or something. But actually the reason why I posted the link was because isn't it kind of cool that a NZ company is taking first spot 2 years running? Anyone feel like, just a little bit, proud or some sense of positivity rather than the general loathing that we've been seeing lately? Great branding for Xero, for NZ, and maybe just a little reminder to the haters that it is not all about profit and nothing else when you see it from the perspective of those that aren't fortunate enough to live on these fair lands. Indeed those fools over in the U.S. (where they know little of business and investing by the looks of things given the amount of U.S. money that has been channeled into this loser company recently) actually concern themselves with the concept of potential. Ie- to look forward and see what could be rather than look back and see what has been. Great to see Xero still leading the list.

Well said, Santiago. I had given up reading XRO forum here as it was all starting to be same same/bash bash. Good post. Lots to be proud of from lil' NZ tech scene.

[tga_trader]

Well said, Santiago. I had given up reading XRO forum here as it was all starting to be same same/bash bash. Good post. Lots to be proud of from lil' NZ tech scene.

Thats the problem though. Both sides are arguing completely different arguments. To the 'love it' side, Yes it's a great company, haven't they done well, good on them, hoorah etc, no one is arguing that. The 'against' argument is that it's overvalued as a stock which without a guidance on when there will be profit and how much (which when it happens will ultimately set the share price) theres no way to know what the value should be.
That's why this thread keeps going in circles.

[RGR367]

Thats the problem though. Both sides are arguing completely different arguments. To the 'love it' side, Yes it's a great company, haven't they done well, good on them, hoorah etc, no one is arguing that. The 'against' argument is that it's overvalued as a stock which without a guidance on when there will be profit and how much (which when it happens will ultimately set the share price) theres no way to know what the value should be.
That's why this thread keeps going in circles.

I don't think we'll ever get the Forum to agree on one thing about a particular share especially this stock. I'm happy to listen to both arguments or for all arguments that got presented on a company that I follow.

disc: still holding

[skid]

I am proud to see an innovative New Zealand Co giving it a go on the international stage (while my money sits in safer options)

[mikeybycrikey]

This Forbes list appears interesting.

It seems to be assuming that the market is always right and that the innovation premium means that investors are correctly pricing the stock despite current cashflows.

The alternative is that the market is wrong and some of these stocks are over valued.

On balance, it seems that the inmates have taken over the asylum and created a random list of over-valued companies.

The problem with Xero and other growth companies (especially loss-making ones like Xero) is that working out the growth is hard. And growth is the most important part of valuing them.

Using current cash-flow it's relatively easy to value a company that is showing minimal growth but when Xero's revenue in the last FY is about 12x what it was in FY11, it's really hard to value because revenue in FY19 could continue the 12x growth or (more likely) it will only be maybe 2x or 3x. Or anything in between.

I think the current price is counting on 5x growth in the next 4 years. This seems achievable to me given their history, but I wouldn't put them at the top of a list to celebrate it.