NextDecade (NEXT) is back in focus after its partially owned subsidiary, Rio Grande LNG, LLC, announced plans to issue senior secured notes in a private offering to qualified institutional and non US investors.

Despite the financing plans at Rio Grande LNG, NextDecade’s recent share price momentum has cooled. The stock is down 16.84% over 30 days and 13.68% over 90 days. Its year to date share price return of 30.76% contrasts with a 1 year total shareholder return that is down 18.29% and a 5 year total shareholder return that is up 70.34%.

If you are weighing how this financing story fits into the wider energy transition theme, it can help to scan similar opportunities through the 89 nuclear energy infrastructure stocks

With Rio Grande LNG’s new debt plans in focus and NextDecade shares pulling back after a strong year to date rise, you have to ask whether current valuations still leave upside on the table or whether the market is already pricing in future growth.

Most Popular Narrative: 19.6% Undervalued

At a last close of $7.04 versus a narrative fair value of $8.75, followers of the most popular view on NextDecade see meaningful upside potential grounded in long term LNG contracts and project build out assumptions.

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 confidence in early LNG cash flows? The core of this narrative is an aggressive revenue ramp, margin uplift and a future earnings multiple that together support the $8.75 fair value without relying on optimistic profitability timelines.

Result: Fair Value of $8.75 (UNDERVALUED)

However, the bullish NextDecade narrative still hinges on Rio Grande LNG staying on schedule and on long term LNG demand not softening under energy transition pressure.

Next Steps

If the mix of optimism and caution around NextDecade leaves you undecided, promptly review the underlying data and form your own stance using the 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.