Is NextDecade (NEXT) Undervalued Following Its Recent Pullback?

NextDecade (NEXT) drew fresh attention after recent trading left the stock down about 11% over the past month and roughly 11% over the past 3 months, despite a market value near US$1.8b.

NextDecade’s recent pullback sits against a different backdrop over longer horizons, with the share price still showing a 23.88% year to date return and a 5 year total shareholder return of 139.75%. This points to fading short term momentum after a strong multi year run and suggests recent weakness may reflect changing views on its growth prospects and project risks rather than a simple one off move.

Scan how NextDecade’s recent pullback compares with peers by lining it up against 19 nuclear energy infrastructure stocks in the wider energy transition theme.

NextDecade now trades at about US$6.67 while the average analyst target sits near US$8.70, leaving a wide gap. Is the recent pullback closing in on fair value, or is it opening up a mispricing?

Most Popular Narrative: 23% Undervalued

On the most followed view of fair value, NextDecade’s shares at about $6.67 sit well below a narrative fair value of $8.70, which hinges on Rio Grande LNG turning early production into meaningful cash generation over time.

Early cargo sales of over 175 trillion BTUs at expected margins of more than US$3 per MMBtu and the company’s projection that approximately 3,800 TBtus of early LNG volumes could generate US$1.2b to US$2b of distributable cash flow provide a defined path to use near term cash inflows to reduce term loans and corporate level leverage, which can support future net income.

See why 3 investors see NextDecade as 23% undervalued.

Result: Fair Value of $8.70 (UNDERVALUED)

Still, the bullish NextDecade story hinges on Rio Grande LNG hitting construction and commissioning timelines, and on LNG demand remaining healthy enough to support those projected cargo margins.

Find out about the key risks to this NextDecade narrative.

Next Steps

With sentiment on NextDecade clearly split between concern and optimism, move quickly, examine the data for yourself, and weigh up the 1 key reward and 3 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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