NextDecade (NEXT): Exploring Valuation After Major Rio Grande LNG Partnerships and Project Milestones

NextDecade (NEXT) has been making waves with a flurry of important updates centered on its Rio Grande LNG facility. Partnerships with TotalEnergies, Baker Hughes, and ConocoPhillips are front and center. These collaborations are shaping the next phase of the project.

See our latest analysis for NextDecade.

Despite headline-making partnerships and major project milestones, NextDecade’s share price has barely budged this year. Its one-year total shareholder return remains positive at just under 0.4%. With momentum and outside interest building, investors are watching for the next catalyst as collaboration activity heats up.

If you’re curious what else is generating buzz, it could be the perfect moment to broaden your search and discover fast growing stocks with high insider ownership

With shares treading water despite a flood of positive news and lingering well below analyst price targets, investors now face a pivotal question: is this a hidden bargain, or is all that future growth already reflected in the price?

Price-to-Book Ratio of 7.1x: Is it justified?

NextDecade's stock is trading at a price-to-book ratio of 7.1x, significantly higher than both the industry average and close competitors. This indicates the current share price is far above the underlying book value of the company.

The price-to-book (P/B) ratio shows how much investors are willing to pay for each dollar of net assets. In capital-intensive sectors like oil and gas, this measure is often used to benchmark whether a stock is overvalued relative to its assets and industry trends.

With NEXT at 7.1x, the premium over the US Oil and Gas industry average of 1.4x signals that expectations are very high. Investors may be pricing in future growth or potential project breakthroughs. However, this premium might not be justified if tangible results do not materialize or if profitability continues to lag. The peer average P/B of 1.6x further highlights how high this valuation is compared to alternatives in the sector.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book Ratio of 7.1x (OVERVALUED)

However, persistent net losses and negative short-term returns could act as stumbling blocks. This may cast doubt on the current optimism surrounding future growth.

Find out about the key risks to this NextDecade narrative.

Another View: What Does Our DCF Model Indicate?

Looking at NextDecade from the perspective of our SWS DCF model paints a strikingly different picture. The current share price of $7.04 is far above our DCF-based fair value estimate of $1.61, which suggests the stock is overvalued based on projected future cash flows. Does this gap signal caution, or is the market seeing something our model does not?

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 NextDecade 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 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 NextDecade Narrative

If you want a different angle on the story, or trust your own deep dive more than any model, it’s easy to build your own view in just a few minutes. Do it your way

A great starting point for your NextDecade research is our analysis highlighting 1 key reward and 4 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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