Yahoo Finance At UK£90.36, Is NEXT plc (LON:NXT) Worth Looking At Closely?
Today we're going to take a look at the well-established NEXT plc (LON:NXT). The company's stock received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£94.26 at one point, and dropping to the lows of UK£85.10. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether NEXT's current trading price of UK£90.36 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at NEXT’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for NEXT
What's The Opportunity In NEXT?
According to our valuation model, NEXT seems to be fairly priced at around 9.5% below our intrinsic value, which means if you buy NEXT today, you’d be paying a fair price for it. And if you believe that the stock is really worth £99.84, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since NEXT’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will NEXT generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of NEXT, it is expected to deliver a negative earnings growth of -0.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Currently, NXT appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on NXT for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on NXT should the price fluctuate below its true value.
If you want to dive deeper into NEXT, you'd also look into what risks it is currently facing. While conducting our analysis, we found that NEXT has 2 warning signs and it would be unwise to ignore these.
If you are no longer interested in NEXT, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
