3-Year Return on Invested Incremental Capital (3-Year ROIIC %) measures the change in earnings as a percentage of change in investment over 3-year.
Xero's 3-Year ROIIC % for the quarter that ended in Mar. 2026 was -1.51%. High ROIIC is generally an indication that your business is capital efficient or has a higher operating leverage.
The industry rank for Xero's 3-Year ROIIC % or its related term are showing as below:
ASX:XRO's 3-Year ROIIC % is ranked worse than 62.01% of 2627
companies
in the Software industry
Industry Median: 5.33
vs ASX:XRO: -1.51
Xero (ASX:XRO) 3-Year ROIIC % Explanation
Return on Incremental Invested Capital (ROIIC) is an extension of Return on Investment Capital (ROIC). ROIC % tells investors how efficiently that profitability is earned per dollar of company capital. ROIIC narrows the focus even further and shows how profitable each additional unit of capital investment could be. ROIIC % is a more powerful metric than ROIC because it measures how much money the company can generate going forward on future capital investments.
High ROIIC is generally an indication that your business is capital efficient or has a higher operating leverage.
Be Aware
It's important to keep in mind that when tracking ROIIC, the metric is better suited to forecasting the trend of future returns rather than measuring current return on investment.
Xero 3-Year ROIIC % Related Terms
Xero 3-Year ROIIC % Historical Data
* Premium members only.
The historical data trend for Xero's 3-Year ROIIC % 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.
ASX:XRO vs UBER, SHOP, CRM: 3-Year ROIIC % Comparison
For the Software - Application subindustry, Xero's 3-Year ROIIC %, along with its competitors' market caps and 3-Year ROIIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Xero 3-Year ROIIC % vs Software Industry
For the Software industry and Technology sector, Xero's 3-Year ROIIC % distribution charts can be found below:
* The bar in red indicates where Xero's 3-Year ROIIC % falls into.
Xero's 3-Year ROIIC % for the quarter that ended in Mar. 2026 is calculated as:
3-Year ROIIC %
=
3-Year Incremental Net Operating Profit After Taxes (NOPAT)**
/
3-Year Incremental Invested Capital**
=
( -7.5822208 (Mar. 2026) - 74.366 (Mar. 2023) )
/
( 6772.458 (Mar. 2026) - 1338.019 (Mar. 2023) )
=
-81.9482208
/
5434.439
=
-1.51%***
* 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.
** Annual data of NOPAT and Invested Capital was used to calculate 3-Year ROIIC %.
*** Please be aware that the ROIIC (Return on Invested Capital) calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
Xero (ASX:XRO) has a 3-Year ROIIC % of -1.51 as of Mar. 2026. 3-Year ROIIC % measures the change in earnings as a percentage of change in investment over 3-year. View historical data on Xero and its competitors. According to the industry distribution chart, Xero ranks #1629 out of 2627 companies in the Software industry, placing it in the top 62%.
Is Xero's 3-Year ROIIC % too high?
Xero's current 3-Year ROIIC % is -1.51. Based on the distribution chart, Xero ranks #1629 out of 2627 companies in the Software industry, which is below the industry midpoint. Overall, Xero has a GF Score™ of 81/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does Xero's 3-Year ROIIC % compare to UBER and SHOP?
According to the Software industry distribution chart, Xero ranks #1629 out of 2627 companies for 3-Year ROIIC %. This places Xero in the lower half of its industry. The industry median 3-Year ROIIC % is 5.33. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good 3-Year ROIIC % for a Software company?
The median 3-Year ROIIC % among Software companies is 5.33, based on 2,627 companies in the industry. Companies in the top quartile (top 25%) have a 3-Year ROIIC % significantly above this median, while those in the bottom quartile fall well below. However, 3-Year ROIIC % 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 3-Year ROIIC % mean?
A high 3-Year ROIIC % can signal that a stock is expensive relative to its fundamentals. 3-Year ROIIC % measures the change in earnings as a percentage of change in investment over 3-year. View historical data on Xero and its competitors. For the Software industry, the median 3-Year ROIIC % is 5.33 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Xero's current 3-Year ROIIC % is -1.51. 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?
Based on GuruFocus' analysis, Xero (ASX:XRO) is currently considered Possible Value Trap. The stock's GF Value™ is A$196.41, compared to a current price of A$71.23 — trading 63.7% below its estimated fair value. The current 3-Year ROIIC % is -1.51. Xero's overall GF Score™ is 81/100 with 7 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is 3-Year ROIIC % calculated?
3-Year ROIIC % is calculated from a company's financial statements. For Xero (ASX:XRO), the current 3-Year ROIIC % is -1.51 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.
Is Xero (ASX:XRO) Overvalued in 2026?
Based on GuruFocus' analysis, Xero stock appears to be undervalued.
The current stock price of A$71.23 is trading 63.7% below its estimated GF Value™ of A$196.41.
GuruFocus considers Xero to be Possible Value Trap.
Key valuation signals for ASX:XRO:
3-Year ROIIC %: -1.51
GF Value™: A$196.41 vs. price of A$71.23 (63.7% below fair value)
No single metric tells the full story. See the ASX:XRO stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
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.
81GF Score
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