Intrinsic Value NEXT plc (NXT.L)

• Previous Close: £13,265.00
• Intrinsic Value: £4,859.61
• Upside potential: -63%

Stock Valuation Context

Business Model And Market Position

NEXT plc is a leading UK-based retailer specializing in clothing, footwear, and home products, operating through a diversified multi-channel strategy. The company's revenue streams include physical retail stores, a robust e-commerce platform (NEXT Online), and franchise operations across 35 countries. NEXT also engages in consumer credit services through NEXT Finance and leverages its sourcing arm, NEXT Sourcing, to optimize supply chain efficiency. Its product portfolio spans own-brand labels like LABEL and Lipsy, alongside third-party brands, catering to a broad demographic. NEXT maintains a strong market position in the competitive apparel retail sector, supported by its integrated online-offline model and disciplined inventory management. The company’s international franchise network and strategic focus on digital growth further reinforce its resilience in evolving retail landscapes.

Revenue Profitability And Efficiency

NEXT reported revenue of £6.12 billion (GBp 611.8 billion) for FY2025, with net income of £736 million (GBp 736.1 million), reflecting a healthy margin. Operating cash flow stood at £1.13 billion (GBp 1.13 trillion), underscoring efficient working capital management. Capital expenditures were modest at £129 million (GBp 129.3 million), indicating disciplined reinvestment.

Earnings Power And Capital Efficiency

Diluted EPS of 606p (GBp 6.06) demonstrates strong earnings power. The company’s ability to generate consistent cash flow supports its credit services and dividend payouts. NEXT’s capital efficiency is evident in its balanced approach to growth investments and shareholder returns.

Balance Sheet And Financial Health

NEXT holds £200 million (GBp 200.4 million) in cash against total debt of £1.87 billion (GBp 1.87 trillion), reflecting manageable leverage. The company’s liquidity position remains stable, with operating cash flow comfortably covering debt obligations and capex.

Growth Trends And Dividend Policy

NEXT’s growth is driven by e-commerce expansion and international franchises, offsetting slower physical retail trends. The dividend per share of 216p (GBp 2.16) aligns with its commitment to returning capital, supported by earnings stability.

Valuation And Market Expectations

With a market cap of £15.04 billion (GBp 1.5 trillion) and a beta of 1.13, NEXT is priced for moderate volatility but trades at a premium reflective of its defensive retail positioning and digital resilience.

Strategic Advantages And Outlook

NEXT’s integrated model, brand diversification, and disciplined financial management position it well for sustained growth. Challenges include inflationary pressures, but its agile supply chain and digital focus provide a competitive edge.

Sources

Company filings, LSE disclosures