Is NextDecade’s Slumping Share Price Creating an Opportunity in 2025?

• Wondering if NextDecade at around $5 is a contrarian bargain or a value trap? This article is going to walk through what the numbers are really telling us about the stock.
• Despite a long term gain of 137.4% over 5 years and 11.9% over 3 years, the shares have slid 3.5% in the last week, 12.3% over the past month, and are down 36.5% year to date and 24.2% over the last year.
• That pullback has come as investors digest shifting sentiment around US LNG export projects, evolving regulatory timelines, and changing expectations for future capacity build outs. At the same time, attention on global gas demand and energy security has kept NextDecade in the conversation as a potential long term LNG beneficiary.
• Right now, NextDecade scores just 0 out of 6 on our valuation checks. We will break down what that really means across different valuation methods, and then finish by looking at a smarter way to interpret those numbers in the context of the company’s long term story.

NextDecade scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: NextDecade Dividend Discount Model (DDM) Analysis

The Dividend Discount Model estimates what a stock is worth by projecting all future dividend payments and discounting them back into today’s dollars. For NextDecade, the inputs to this model paint a challenging picture for long term dividend potential.

The company’s current dividend per share is estimated at about $0.35, but the calculated return on equity is a negative 14.47%. When this negative profitability is combined with the payout ratio, the implied dividend growth rate comes out at roughly minus 14.5% a year, using the formula shown: Calculated (1 - Payout Ratio) x ROE, (1 - -0.09%) x -14.47%). In simple terms, the model assumes dividends will shrink over time rather than grow.

On that basis, the DDM arrives at an intrinsic value of roughly $1.62 per share. With the stock trading around $5, the model suggests the shares are about 225.9% above this income based valuation, implying material overvaluation if you are investing primarily for dividends.

Result: OVERVALUED

Our Dividend Discount Model (DDM) analysis suggests NextDecade may be overvalued by 225.9%. Discover 916 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for NextDecade.

Approach 2: NextDecade Price vs Book

For asset-heavy energy companies, the price-to-book ratio is a useful way to gauge how much investors are paying for each dollar of net assets. In general, higher growth prospects and lower perceived risk can justify a premium to book value, while slower growth or higher uncertainty usually call for a discount.

NextDecade currently trades at about 9.03x book value, which is far above both the Oil and Gas industry average of roughly 1.34x and the peer group average of around 1.53x. On a simple relative basis, the market is assigning a very rich valuation to the company’s balance sheet.

Simply Wall St’s Fair Ratio is a proprietary estimate of what a reasonable price-to-book multiple should be for a specific company, once you factor in its earnings growth outlook, profitability, risk profile, industry characteristics and market cap. This makes it more informative than a basic comparison with peers or industry averages, which ignore many of these nuances. While the exact Fair Ratio for NextDecade is not available here, the large gap between 9.03x and typical sector benchmarks suggests the shares are priced well above what fundamentals alone might support.

Result: OVERVALUED

PB ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1458 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your NextDecade Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that lets you attach a clear story, your view on NextDecade’s future revenue, earnings and margins, to the numbers behind a fair value estimate. A Narrative connects three pieces: what you believe about the business, how that belief translates into a financial forecast, and what fair value that forecast implies, so you can see in one place whether the current price looks attractive or stretched. Narratives are built directly into Simply Wall St’s Community page, where millions of investors use them as an easy, visual tool to decide whether to buy, hold or sell by comparing their fair value to today’s market price. They also update automatically as fresh news, guidance or earnings reports change the outlook. For NextDecade, one investor’s conservative Narrative might see limited LNG expansion and assign a fair value well below the current price, while another investor’s optimistic Narrative could assume robust long term demand and expansion, supporting a much higher fair value.

Do you think there's more to the story for NextDecade? Head over to our Community to see what others are saying!

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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