3 Undervalued ASX Stocks to Watch in 2026
These ASX companies are performing strongly in 2026 with solid growth in sales and profits, better cash generation and stable expansion into new markets, which is also supporting improved returns for shareholders.
Technology One Limited (ASX: TNE),
Technology One Limited (ASX: TNE), on 19 May 2026, reported H1 FY26 results. The total revenue $322.7m up 11%, ARR $598.0m up 17% and SaaS recurring revenue $299.2m up 13%.
Profit before tax $89.1m up 9%, profit after tax $66.8m up 6%, expenses $233.6m up 12%, free cash flow $20.3m down 15%, cash and investments $245.5m up 16%.
Net revenue retention 114%, UK ARR $53.0m up 23%, Rule of 40 result 55%, R&D investment $84.1m up 22% equal 26% of income, AI strategy launched with Plus and Guide and in-product capabilities expanding enterprise intelligence.
Guidance reaffirmed with continued SaaS+ strategy and long-term investment. FY30 target ARR exceeds $1.0bn with business expected to double every five years. Profit margin outlook above 35% long term. Interim dividend 8.0 cents per share up 21% reflecting strong confidence and ongoing shareholder returns and continued global expansion focus execution discipline.
Xero Limited (ASX: XRO),
Xero Limited (ASX: XRO), on 14 May 2026, FY26 results showed revenue $2.8 billion up 31%, adjusted EBITDA $757.4 million up 18%, EBITDA $789.5 million, free cash flow $554.0 million, operating efficiency improved expense ratio 70.5%.
Customers increased by 506,000 during FY26, AMRR reached $3.3 billion, total lifetime value $21.0 billion, churn remained at 1.14%, with Australia New Zealand revenue $1.4 billion up 18%, and international revenue $1.4 billion up 47%.
AI-driven tools expanded through JAX automation, Melio integration improving payments, partnerships with Anthropic and OpenAI, plus smart document capture, with 500,000 users adopting GenAI features and 115% rise in messages per user across platforms XeroForce launched.
FY27 outlook expects revenue between $3,620 million and $3,730 million, adjusted EBITDA $860 million to $920 million, increased US investment spend noted along with capitalisation rates 40-45%, depreciation about $465 million and continued strategy expansion focus maintained.
Mader Group Limited (ASX: MAD),
Mader Group Limited (ASX: MAD),on 24 February 2026, shared half year FY26 results with revenue $485.2m, improved 18% versus prior corresponding period. The net profit after tax was $30.5m, up 17% and reached about 47% of full year guidance
Australian operations rose 19% on stronger demand and added services. North America gained 13% from wider customer base and expansion program. Rest of World increased 36% across six countries and New Zealand activity began.
Net debt closed at $3.6m, down $4.7m or 57% from 30 June 2025. Interim dividend was deferred to speed move toward net cash and improve liquidity for expansion and investment options capital allocation strategy ongoing.
Outlook remains positive for all segments into second half FY26 and FY27. Company stays on track for five-year plan ending FY26, with guidance of at least $1b revenue and $65m NPAT as planned execution continues.
(Source: Company Report)
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