NextDecade (NEXT): Assessing Valuation Following Major LNG Offtake Deals and Project Milestones

If you have been watching NextDecade (NEXT), the recent wave of long-term LNG offtake agreements from the Rio Grande LNG project is definitely turning heads. In just a few days, major players such as EQT and now ConocoPhillips have locked in 20-year purchase commitments tied to Train 5. These deals, contingent on a positive final investment decision, signal growing commercial momentum for NextDecade’s ambitious expansion plans and are hard for investors to ignore, especially as the company clarifies commercialization targets and construction costs.

All of this comes at a time when NextDecade’s stock has been anything but quiet. Shares have more than doubled over the past year, yet experienced some pullback in the past month despite the string of contract wins. With long-term fundamentals grabbing attention and active news flow underlining the project’s viability, investors are weighing just how much of the future upside is starting to get priced in, and if the latest moves mark a shift in market sentiment or just healthy consolidation after outsized gains.

So with all this positive activity lining up behind Rio Grande LNG, is the stock now undervalued considering its growth pipeline, or is the market already assigning full value to the company’s expansion ambitions?

Price-to-Book of 10.1x: Is it justified?

NextDecade is currently valued with a Price-to-Book (P/B) ratio of 10.1x, which is significantly higher than the US Oil and Gas industry average of 1.3x. This places the stock firmly in the expensive category when benchmarked against industry peers using this metric.

The Price-to-Book ratio compares a company's market value to its book value, offering insights into how much investors are willing to pay for each dollar of net assets. In capital-intensive industries like oil and gas, a high P/B can signal strong expectations of future growth; however, it may also highlight investor eagerness that outpaces near-term fundamentals.

While the market has clearly priced in substantial growth potential for NextDecade, especially given its aggressive expansion plans and high forecasted revenue growth, this elevated valuation may reflect confidence in future profitability that is not imminent. The market could be overestimating, given that NextDecade is currently unprofitable and not forecast to achieve profitability in the short-term.

Result: Fair Value of $1.96 (OVERVALUED)

See our latest analysis for NextDecade.

However, stalled project financing or delays in securing further offtake agreements could quickly erode recent momentum and bring valuation concerns back into focus.

Find out about the key risks to this NextDecade narrative.

Another View: What Does the SWS DCF Model Say?

Taking a different approach, the SWS DCF model also views the stock as more expensive than its underlying value. While both methods point in the same direction, it is worth considering whether future upside could still surprise.

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

Stay updated when valuation signals shift by adding NextDecade to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own NextDecade Narrative

If you see things differently or enjoy drawing your own conclusions, it only takes a couple of minutes to dive in and form your own view. Do it your way

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

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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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