Does New Fortress Energy’s 90% Slide in 2025 Create a Valuation Opportunity?

• If you are wondering whether New Fortress Energy is a bargain after its big sell off, you are not alone. This stock now sits in territory where price and value may be telling very different stories.
• In the very short term the shares have bounced, up 28.7% over the last week and 5.4% over the last month, but that comes after a brutal slide of 90.4% year to date and 87.3% over the past year.
• Those moves have unfolded against a backdrop of ongoing execution on its liquefied natural gas infrastructure strategy and market speculation about how its long term contracts and project pipeline will hold up in a tougher funding and commodity price environment. At the same time, investors have been reassessing the risk profile of capital intensive energy transition plays more broadly, which has added extra volatility to names like New Fortress.
• On our valuation framework New Fortress Energy scores a 3/6 on undervaluation checks. You can see this in detail in its valuation score. Next we will walk through what that means across different valuation approaches, before finishing with an even more useful lens for thinking about what the stock is really worth.

Find out why New Fortress Energy's -87.3% return over the last year is lagging behind its peers.

Approach 1: New Fortress Energy Dividend Discount Model (DDM) Analysis

The Dividend Discount Model estimates what a stock is worth by projecting all future dividends a company is expected to pay and discounting them back to today, based on an assumed growth rate and required return.

For New Fortress Energy, the inputs point to only a very small current dividend of about $0.0033 per share and a moderate return on equity of roughly 11.6%. The model assumes dividends can grow at about 3.26% a year, capped down from an initially higher estimate, with an expected underlying growth profile of around 6.6%. This growth needs to be viewed against a relatively high payout ratio of about 43.6%, which limits how much cash can be reinvested to drive future increases.

When these assumptions are run through the DDM framework, the implied intrinsic value is only about $0.09 per share, suggesting the stock is roughly 1640.8% overvalued relative to the current market price. On this dividend based lens, New Fortress Energy appears richly priced and would need significantly faster, more sustainable dividend growth to justify today’s valuation.

Result: OVERVALUED

Our Dividend Discount Model (DDM) analysis suggests New Fortress Energy may be overvalued by 1640.8%. Discover 906 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 New Fortress Energy.

Approach 2: New Fortress Energy Price vs Sales

For companies where current profits are volatile or negative, the Price to Sales ratio can be a more useful yardstick than earnings based metrics, because revenue is typically more stable and less affected by accounting noise. In general, higher growth and lower risk justify a richer multiple, while slower or more uncertain growth should command a discount to the sector.

New Fortress Energy currently trades on a Price to Sales ratio of about 0.25x, which is well below both the Oil and Gas industry average of roughly 1.56x and the peer group average of around 1.19x. Simply Wall St also calculates a proprietary “Fair Ratio” for each company. In this case it sits at about 1.13x. This Fair Ratio reflects what a reasonable Price to Sales multiple might be once you factor in New Fortress Energy’s growth outlook, risk profile, profit margins, industry positioning and market capitalization, making it a more tailored benchmark than simple peer or industry comparisons.

When we compare the current 0.25x Price to Sales with the 1.13x Fair Ratio, the shares screen as materially below what would be considered normal for the business. This suggests that the valuation may be lower than what these fundamentals would imply.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your New Fortress Energy Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company, translated into numbers like future revenue, earnings, margins and a fair value that you can compare to today’s share price.

A Narrative connects what you believe will happen in the real world, such as how New Fortress Energy executes in Puerto Rico or Brazil, to a financial forecast and then to a fair value estimate. This turns your view into a clear buy, hold or sell signal by comparing that fair value against the current market price.

On Simply Wall St’s Community page, used by millions of investors, Narratives are easy to build and track. They automatically refresh when new information like earnings reports, LNG contract news, or updated analyst forecasts comes in, so your view on New Fortress Energy does not go stale.

For example, one investor might build a bullish New Fortress Energy Narrative with a fair value closer to the optimistic 8.5 dollar target, while a more cautious investor leans toward 3.0 dollars. By comparing each Narrative’s fair value to the latest share price they can independently decide whether the current sell off looks like an opportunity or a warning sign.

Do you think there's more to the story for New Fortress Energy? 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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