A Look at New Fortress Energy’s (NFE) Valuation Following Debt Restructuring Plans and Sharp Share Price Rebound

New Fortress Energy (NFE) has drawn attention after it began exploring a UK debt restructuring process as an alternative to bankruptcy, following delays in key projects and pressure from looming debt payments. Shares jumped over 20% in premarket trading, signaling investors’ reaction to the news.

See our latest analysis for New Fortress Energy.

This debt restructuring move comes after an extremely volatile period for New Fortress Energy, marked by sharp swings and deeply negative returns. While the stock rebounded dramatically in premarket trading following the restructuring news, its 1-year total shareholder return is still down 85.2%. The year-to-date share price return remains a staggering -91.4%. Momentum has been mostly downward in recent months, reflecting lingering concerns about the company's ability to address its financial challenges.

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With shares trading far below analyst targets despite a sharp rebound, the question now is whether the stock is truly undervalued or if markets have already priced in the company’s prospects for future recovery.

Most Popular Narrative: 58.5% Undervalued

With New Fortress Energy trading at $1.40 while the most popular narrative places fair value at $3.38, market pessimism stands in sharp contrast to bullish long-term expectations.

The FLNG asset coming online is expected to significantly contribute to future earnings as it allows optimization of the portfolio, leading to increased future returns and positively impacting revenue and earnings. The initiative to reduce debt and simplify the capital structure will decrease debt costs, improving net margins and overall financial health.

Read the complete narrative.

What’s fueling this bold valuation call? The calculation hinges on aggressive improvements in both earnings and margins, all anchored in ambitious multi-year growth projections. Curious about the exact assumptions that drive such an optimistic fair value? Dive deeper and see the quantitative blueprint that could change the game for NFE.

Result: Fair Value of $3.38 (UNDERVALUED)

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

However, some risks remain, such as execution struggles on new projects or shifts in key markets like Puerto Rico. These could quickly undermine recovery hopes.

Find out about the key risks to this New Fortress Energy narrative.

Another View: Discounted Cash Flow Model Poses a Challenge

Looking beyond analyst price targets, our SWS DCF model tells a more cautious story. It estimates New Fortress Energy’s current fair value at just $0.09 per share, which is far below the latest trading price. This raises important questions about which set of assumptions investors should trust.

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 New Fortress Energy 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 861 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 New Fortress Energy Narrative

If you have a different perspective or want to challenge the consensus, you can easily craft your own view in just a few minutes. Do it your way

A great starting point for your New Fortress Energy research is our analysis highlighting 2 key rewards and 2 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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