Xero (XERYY) ROC %: -0.38% (As of Mar. 2026)


What is Xero ROC %?

Xero XERYY 76 ROC % is -0.38% as of Mar. 2026. GuruFocus rates XERYY with a GF Score™ of 76/100. The stock has 7 warning signs investors should review.

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Xero's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was -0.38%.

As of today (2026-06-25), Xero's WACC % is 12.18%. Xero's ROC % is -0.16% (calculated using TTM income statement data). Xero earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Xero  (OTCPK:XERYY) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Xero's WACC % is 12.18%. Xero's ROC % is -0.16% (calculated using TTM income statement data). Xero earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Xero ROC % Related Terms

Xero ROC % Historical Data

* Premium members only.

The historical data trend for Xero's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Xero ROC % Chart

Xero Annual Data
Trend Mar17 Mar18 Mar19 Mar20 Mar21 Mar22 Mar23 Mar24 Mar25 Mar26
ROC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 0.00 5.33 12.03 1.79 -0.15

Xero Semi-Annual Data
Sep16 Mar17 Sep17 Mar18 Sep18 Mar19 Sep19 Mar20 Sep20 Mar21 Sep21 Mar22 Sep22 Mar23 Sep23 Mar24 Sep24 Mar25 Sep25 Mar26
ROC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 32.14 1.90 1.25 0.71 -0.38

Xero ROC % Calculation

Xero's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2026 is calculated as:

ROC % (A: Mar. 2026 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Mar. 2025 ) + Invested Capital (A: Mar. 2026 ))/ count )
=-10.797 * ( 1 - 50.72% )/( (2221.213 + 4752.602)/ 2 )
=-5.3207616/3486.9075
=-0.15 %

where

Invested Capital(A: Mar. 2025 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=2555.778 - 52.439 - ( 1334.45 - max(0, 1191.765 - 1473.891+1334.45))
=2221.213

Invested Capital(A: Mar. 2026 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=5323.203 - 429.361 - ( 1131.832 - max(0, 1495.199 - 1636.439+1131.832))
=4752.602

Xero's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2026 is calculated as:

ROC % (Q: Mar. 2026 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Sep. 2025 ) + Invested Capital (Q: Mar. 2026 ))/ count )
=-51.174 * ( 1 - 73.38% )/( (2330.436 + 4752.602)/ 2 )
=-13.6225188/3541.519
=-0.38 %

where

Invested Capital(Q: Sep. 2025 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=4023.117 - 71.869 - ( 2776.08 - max(0, 1275.501 - 2896.313+2776.08))
=2330.436

Invested Capital(Q: Mar. 2026 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=5323.203 - 429.361 - ( 1131.832 - max(0, 1495.199 - 1636.439+1131.832))
=4752.602

Note: The Operating Income data used here is two times the semi-annual (Mar. 2026) data. The tax rate is limited to between 0% and 100%.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Frequently Asked Questions Learn more about ROC % →
What does a ROC % of -0.38% mean?
Xero (XERYY) has a ROC % of -0.38% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Xero and its competitors.
Is Xero's ROC % too high?
Xero's current ROC % is -0.38%. Overall, Xero has a GF Score™ of 76/100, reflecting its overall financial health beyond just this single metric.
How does Xero's ROC % compare to CRM and SHOP?
Xero's ROC % of -0.38% can be compared against companies in the Software industry. The industry median ROC % is 3.11. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Software company?
The median ROC % among Software companies is 3.11, based on 2,828 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Xero and its competitors. For the Software industry, the median ROC % is 3.11 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Xero's current ROC % is -0.38%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Xero stock overvalued right now?
Xero (XERYY) has a current ROC % of -0.38%. The current ROC % is -0.38%. Xero's overall GF Score™ is 76/100 with 7 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Xero (XERYY), the current ROC % is -0.38% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.

Xero Business Description

Address 19-23 Taranaki Street, Te Aro, Wellington, NTL, NZL, 6011
Xero is a technology company originating from New Zealand, providing cloud-based accounting software, primarily for small and midsized enterprises, or SMEs, and accounting practices. As a first mover in the space for cloud-based accounting software, Xero has grown quickly to achieve dominant market share in New Zealand and Australia, displacing legacy providers. Xero has also expanded beyond its home region toward other English-speaking countries, primarily the UK and the US.