Is Nexans (ENXTPA:NEX) Cheap Following Its Hydro Supply Deal?
Nexans (ENXTPA:NEX) has signed a five year agreement with Norsk Hydro for about 85,000 tonnes of low carbon aluminium wire rod, securing material for European power cable and grid infrastructure projects.
See our latest analysis for Nexans.
At a share price of €134.0, Nexans has seen its 1 year total shareholder return of 23.37% and 5 year total shareholder return of 89.42% contrast with recent 7 day and 30 day share price declines. This suggests longer term momentum alongside some short term cooling as the market processes developments like the Norsk Hydro agreement.
If Nexans's grid and power cable focus has your attention, it may be a good moment to scan other power grid related plays using the Simply Wall St 34 power grid technology and infrastructure stocks
The share price has cooled in recent weeks even as Nexans secures long term inputs like low carbon aluminium. Does that set up a better entry now, or is patience warranted until the valuation looks more compelling?
Most Popular Narrative: 18% Undervalued
With Nexans last closing at €134.0 and a narrative fair value of about €162.73, the current share price sits below what the most followed storyline implies.
The analysts have a consensus price target of €162.73 for Nexans based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €185.0, and the most bearish reporting a price target of just €130.0.
Want to see what is driving that gap between the current price and the fair value line? The key ingredients are future earnings power, margin resets, and how long those trends are assumed to hold. Curious which assumptions really move the model on Nexans and which barely shift the needle?
Result: Fair Value of €162.73 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Nexans still faces two key risks that could challenge that undervalued story: sustained raw material cost swings and project delays in grid or infrastructure work.
Find out about the key risks to this Nexans narrative.
Next Steps
Mixed on Nexans after all this, or leaning one way already? You can put the numbers, risks and potential rewards side by side by checking the 4 key rewards and 2 important warning signs
Looking for more ideas beyond Nexans?
If Nexans has sharpened your interest in power and infrastructure themes, it can be helpful to widen the lens and see what else stands out right now.
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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.
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