NextDecade (NEXT) has just been added to several Russell value benchmarks, including the Russell 2000 Value and Russell 3000 Value indexes. This shift can reshape how institutional investors track the stock.

NextDecade’s recent index inclusions come after a sharp year to date share price return of 40.71%, even though the 1 year total shareholder return declined 15.32%. This suggests strong recent momentum but a mixed longer term experience.

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So, with NextDecade up 40.71% year to date but still showing a 15.32% decline over 1 year and trading at a 24% discount to the US$9.40 analyst price target, is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 13.5% Undervalued

At a last close of $7.57 versus a narrative fair value of $8.75, the most followed view on NextDecade implies upside that hinges on its LNG build out and contracted volumes.

Early cargo sales of over 175 trillion BTUs at expected margins of more than US$3 per MMBtu and the company’s projection that approximately 3,800 TBtus of early LNG volumes could generate US$1.2b to US$2b of distributable cash flow provide a defined path to use near term cash inflows to reduce term loans and corporate level leverage, which can support future net income.

Want to see what sits behind that early cargo story? The narrative leans heavily on future revenue ramp, margin expansion and a specific earnings multiple to justify that $8.75 mark.

Result: Fair Value of $8.75 (UNDERVALUED)

However, the NextDecade narrative still hinges on Rio Grande LNG being built and ramped as planned, and on project debt staying manageable if early cargo margins disappoint.

Next Steps

If the mixed sentiment around NextDecade leaves you on the fence, take a closer look now and weigh both sides of the story with 1 key reward and 3 important warning signs

Looking for more investment ideas beyond NextDecade?

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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.