What to expect from the Xero (ASX:XRO) full year result

The Xero Limited (ASX:XRO) share price will be one to watch closely next week when it releases its full year results. Here’s what to expect…
The post What to expect from the Xero (ASX:XRO) full year result appeared first on The Motley Fool Australia. –

A man looks at his computer and laptop, indicating share price on watch

All eyes will be on the Xero Limited (ASX: XRO) share price next week.

This is because the cloud-based business and accounting software platform provider will be releasing its full year results on Thursday.

What is the market expecting from Xero?

This morning analysts at Goldman Sachs revealed what they are expecting from the company in FY 2021.

According to the note, the broker is forecasting sales growth of 16% to NZ$836 million for the 12 months. Goldman expects this to be driven by a 16% increase in ANZ sales and a 17% lift in International sales.

This is actually a touch under the market consensus estimate of NZ$854 million.

In respect to earnings, its analysts have pencilled in earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$218 million. This will be a 56% increase year on year and, once again, a touch short of the market consensus estimate of NZ$228 million.

On the bottom line, a net profit after tax of NZ$40 million is expected.

What about subs?

Goldman Sachs is expecting Xero’s positive momentum to continue and is forecasting 317,000 net subscriber additions in FY 2021.

This comprises 222,000 in the ANZ market and 95,000 internationally. The latter is expected to have been impacted by COVID-19 disruptions in the Northern Hemisphere.

And while the broker suspects that its average revenue per user (ARPU) metric may soften, it isn’t concerned by this.

It explained: “We forecast ARPU -2% to NZ$28.5, given geographic & sub mix shift, offset by solid underlying trends (noting the recent price rises will predominantly benefit FY22). We will focus on the growth in Xero platform revenues, which grew +21% in 1H21 but +50% when adjusting for Hubdoc reclassification. Our high frequency trackers show +25-32% annualized growth in the number of apps in Xero’s AU/UK/US ecosystems (as at early April), underpinning the value proposition.”

Is the Xero share price in the buy zone?

Goldman Sachs sees a lot of value in the Xero share price.

It currently has a buy rating and $153.00 price target on the company’s shares.

Based on today’s Xero share price, this implies potential upside of almost 15% over the next 12 months.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What to expect from the Xero (ASX:XRO) full year result appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!