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NextDecade (NEXT), Why Is It Drawing Fresh Attention Now?

Simply Wall St · 2d ago

NextDecade (NEXT) has drawn fresh attention after recent trading left the share price at $7.67. Moves over the past month and past 3 months give investors new price action to weigh.

Recent trading suggests momentum around NextDecade is building, with a 1-month share price return of 13.63% and a year-to-date share price return of 42.57%. However, the 1-year total shareholder return of 0.13% shows that longer-term holders have seen only marginal gains so far.

Compare NextDecade's recent share price swing with a curated group of energy plays by scanning the list of solid balance sheet and fundamentals (23 results) that may handle volatility differently.

After that sharp year to date climb and only marginal 1 year return, investors in NextDecade now face a simple tension. Is most of the move already in the rearview mirror, or is meaningful upside still on the table as valuation comes into focus?

Most Popular Narrative: 18.4% Undervalued

At a last close of $7.67 versus a narrative fair value of $9.40, the current pricing for NextDecade sits below what its most followed storyline implies, with that view heavily anchored on long-term LNG contracts and future Rio Grande LNG cash generation.

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.

Read the complete narrative.

Want to see what kind of revenue ramp, margin shift and future earnings multiple sit behind that $9.40 figure? The narrative knits aggressive LNG build out, heavy financing and long duration contracts into one valuation story. The specific assumptions on volumes, pricing and leverage are where it gets interesting.

The analyst consensus narrative behind NextDecade uses an 11.59% discount rate and a very large revenue growth profile to translate those Rio Grande LNG projects into present value. It leans on a future profit margin that lines up with the wider US Oil and Gas sector and assumes the company grows into a P/E multiple that is lower than where many peers are priced today, all while factoring in modest share count expansion as those projects are built out.

Result: Fair Value of $9.40 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Still, the bullish story around NextDecade leans heavily on timely Rio Grande LNG execution, and on substantial project debt staying manageable if early LNG margins soften.

Find out about the key risks to this NextDecade narrative.

Next Steps

Mixed signals around NextDecade can be confusing, so use this as a prompt to move quickly, evaluate the numbers yourself, and consider both sides by reviewing the 1 key reward and 3 important warning signs.

Looking for more ideas beyond NextDecade?

If you only focus on NextDecade, you may miss other opportunities that fit your risk profile, income needs, or preference for balance sheet strength.

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.