Are Nebius Group Shares Justified After a 91.5% Surge and Strong Cloud Deal?

Debating whether to hold, buy, or sell Nebius Group stock? You are not alone. Nebius has captured plenty of attention lately, and with good reason. After a blockbuster 312.6% gain so far this year, and a jaw-dropping 91.5% jump in just the past 30 days, the stock has become a talking point not just for seasoned investors but for casual market-watchers too. Even over the last week alone, shares have leaped 16.6%, showing how quickly sentiment and momentum can shift.

Much of this surge has been attributed to changing perceptions around Nebius Group’s prospects, amplified by recent developments in its core markets and growing optimism about its ability to capitalize on industry trends. The stock’s performance over the past five years, up 107.1%, shows this is not just a case of short-term hype, but a story with some deeper roots.

All these gains might leave you wondering whether Nebius Group is now overvalued, or if there is still some hidden value left to uncover. According to our valuation scorecard, Nebius Group earns a 2 out of 6, meaning it is considered undervalued by two of the six valuation checks we use. That provides a hint as well as a reason to look closer at what those checks reveal (and what they may not capture).

Let us dig into the different approaches analysts use to value Nebius Group, and stay tuned to the end for a perspective on valuation you will not want to miss.

Nebius Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Nebius Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a valuation method that estimates the value of a company by projecting its future cash flows and then discounting them back to their value in today's dollars. For Nebius Group, this approach offers insight into how much the business’s future cash potential is worth based on today’s information and expectations.

Currently, Nebius Group’s most recent Free Cash Flow stands at negative $658.8 Million, reflecting near-term investments and cash outflows. According to analyst projections, the company is expected to turn positive over the next several years, with Free Cash Flow reaching $767.1 Million by 2029. In later years, extrapolated estimates suggest Free Cash Flow could rise to as much as $3.77 Billion by 2035.

When these projected cash flows are discounted using the appropriate rate and summed, the DCF model calculates Nebius Group’s intrinsic value at $138.37 per share. Compared to today’s price, this suggests Nebius Group stock is trading at a 9.0% discount to its estimated worth. This places the stock just inside the range of fair value.

Result: ABOUT RIGHT

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

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Nebius Group's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Nebius Group Price vs Book (P/B) Ratio Analysis

The Price-to-Book (P/B) ratio is a widely used metric for assessing the valuation of companies, especially profitable firms in capital-intensive industries like software, where tangible assets and shareholder equity play a significant role. This ratio compares a company's market price to its net asset value, making it a suitable lens for evaluating Nebius Group's value relative to what it has built up over time.

What constitutes a “fair” P/B ratio is shaped by several factors, including expectations for future growth and the degree of risk investors perceive. Companies with standout growth prospects or lower risk profiles can justify higher multiples, while riskier or slower-growing firms typically command lower ratios.

Currently, Nebius Group trades at a P/B ratio of 8.37x. This is notably above the industry average of 3.99x for software companies, but still below the peer group average of 13.23x. While these benchmarks offer useful context, they each miss nuances that matter to investors, such as whether Nebius Group’s specific growth outlook and risk profile warrant a premium or discount.

To address this, Simply Wall St uses a proprietary Fair Ratio. This calculates the most appropriate multiple for Nebius Group by weighing its earnings growth, profitability, risk, industry norms, and market size. This method provides a more tailored picture of fair value than simply comparing with sector or peer averages.

In Nebius Group’s case, its actual P/B multiple is 8.37x. Comparing this with the Fair Ratio, the difference is marginal, indicating that the shares are trading roughly in line with what would be expected given the company’s unique circumstances.

Result: ABOUT RIGHT

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

Upgrade Your Decision Making: Choose your Nebius Group Narrative

Earlier we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is more than just a set of numbers; it is your view on a company’s story expressed through your assumptions about its future, such as where revenue, earnings, and margins could go, and what that means for fair value.

On Simply Wall St’s Community page, investors use Narratives as an easy and accessible way to link the big picture of a business to its financial forecasts and valuation. This helps you track whether a stock looks undervalued or not as new information becomes available. Narratives are dynamic and automatically update with the latest news, results, or analyst changes, which means your view stays relevant without you needing to crunch the numbers again yourself.

For Nebius Group, you can see exactly how different investors interpret the same data. For example, some now see a fair value as high as $153 per share after major contract wins, while others take a more cautious approach with a view as low as $47. Narratives help you compare these perspectives with the current share price so you can decide for yourself when it makes sense to buy, hold, or sell.

Do you think there's more to the story for Nebius Group? Create your own Narrative to let the Community know!

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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