Nexans (ENXTPA:NEX): Evaluating Whether Strong Recent Share Price Gains Still Leave Upside Potential

Nexans (ENXTPA:NEX) has quietly pushed higher this month, adding to already strong year to date gains, and that kind of steady climb usually makes investors ask whether the current price still offers value.

See our latest analysis for Nexans.

That steady climb, with a 7 day share price return of nearly 4 percent and a year to date share price return above 20 percent, sits on top of a powerful long term backdrop. This includes a 5 year total shareholder return of around 158 percent that signals momentum is still very much intact.

If Nexans has you rethinking where the next big move might come from, this could be a good moment to discover aerospace and defense stocks.

Yet with earnings growth turning negative even as the share price grinds higher, investors are left weighing whether Nexans is trading below its true worth or whether the market has already priced in its next leg of growth.

Most Popular Narrative: 4.2% Undervalued

With Nexans last closing at €128.2 against a narrative fair value near €133.8, the story leans toward modest upside before enthusiasm looks fully priced in.

The ongoing acceleration of global electrification, renewable energy adoption, grid modernization, and significant investments in infrastructure (especially in Europe and emerging markets) continue to drive strong organic growth in Nexans' Electrification, Power Grid, and Transmission segments, supporting a robust order backlog and increased revenue visibility for coming years. Nexans' strategic transformation into a near pure play electrification company, combined with sustained focus on high value grid, offshore wind, and specialty cabling solutions, positions the company to benefit from expanding high margin market opportunities and structurally improve group net margins.

Read the complete narrative.

Curious how slower top line expectations can still support a higher price tag, with margins, earnings mix, and a re rated future multiple doing the heavy lifting? Explore the full narrative.

Result: Fair Value of €133.79 (UNDERVALUED)

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

However, sustained raw material volatility and tougher competition in grid and connect markets could squeeze margins and challenge Nexans' upbeat valuation narrative.

Find out about the key risks to this Nexans narrative.

Another View: Cash Flows Tell a Tougher Story

While the narrative fair value points to modest undervaluation, our DCF model is far more cautious, putting fair value near €83.7, well below the current €128.2 share price. If future cash flows do not ramp as hoped, is today’s optimism already overextended?

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 Nexans 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 928 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Nexans Narrative

If the conclusions here do not fully match your view, or you prefer hands on research, you can build a custom narrative in minutes: Do it your way.

A great starting point for your Nexans research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Make your next move count by tapping into focused stock ideas on Simply Wall Street right now, before the market fully recognizes their potential.

• Capture early stage opportunities by using these 3581 penny stocks with strong financials that already show robust fundamentals instead of risky speculation.
• Capitalize on the AI revolution with these 25 AI penny stocks targeting companies positioned at the heart of intelligent automation and data driven innovation.
• Lock in attractive entry points through these 928 undervalued stocks based on cash flows where market prices still trail long term cash flow potential.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com