A Look At Nordex (XTRA:NDX1) Valuation After New Spanish Turbine And Service Contract Win

Nordex (XTRA:NDX1) is back in focus after securing an 80 MW order in Spain for 13 N175/6.X turbines, including a 20 year Premium Service deal and an option to reach 120 MW.

See our latest analysis for Nordex.

The share price has been gaining momentum, with a 5.41% 1 month share price return, a 42.29% 3 month share price return and a 51.88% year to date share price return. The 1 year total shareholder return of very large magnitude suggests investors have reacted strongly to repeat orders and long term service contracts.

If you are interested in how other power and grid related names are trading, this could be a good moment to scan 30 power grid technology and infrastructure stocks

With €7.6b in revenue, €274.5m in net income and long term service contracts in place, Nordex is no longer a small niche player. The key question now is whether the current valuation still leaves room for an opportunity to buy, or if the market is already pricing in future growth.

Most Popular Narrative: 11.9% Overvalued

The most followed narrative puts Nordex's fair value at about €41.06, which sits below the last close of €45.96, so expectations in the models are doing the heavy lifting.

Execution on large and growing backlogs, combined with improved project delivery and stable pricing, is already driving better-than-expected EBITDA (+64% YoY in Q2) and positive net income, with management guiding for ongoing EBITDA margin expansion toward 8%, setting up for higher net profits and free cash flow.

Read the complete narrative.

Analysts are building this fair value on a mix of steady revenue expansion, firmer margins and a future earnings multiple that is not especially low. Curious which growth and profitability assumptions sit behind that price and how much cushion they leave if anything.

Result: Fair Value of €41.06 (OVERVALUED)

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

However, there is still clear execution risk if European policy support weakens, or if competitors outspend Nordex on new turbine technology and pressure margins.

Find out about the key risks to this Nordex narrative.

Another Angle on Valuation

Analyst models see Nordex as about 11.9% overvalued at €45.96 versus a €41.06 fair value, while Simply Wall St's DCF view is slightly different, with the shares at a 1.3% discount to an estimated future cash flow value of €46.54. Which framework do you find more convincing for a long term view?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Nordex for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 231 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment already leaning positive, this is a good time to move quickly, review the facts yourself, and stress test the upside story. To see what is getting investors excited, check out the 3 key rewards

Looking for more investment ideas?

If Nordex has caught your eye, do not stop here. Use this moment to broaden your watchlist with other focused ideas filtered by clear fundamentals and traits.

• Target resilient balance sheets and steady fundamentals by scanning the solid balance sheet and fundamentals stocks screener (389 results) that filters for financial strength upfront.
• Hunt for quality at a potential discount by reviewing the 231 high quality undervalued stocks aimed at companies where price and fundamentals may be out of sync.
• Prioritise income and staying power by checking the 479 dividend fortresses focused on higher yielding businesses that still aim to keep payouts sustainable.

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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