If NKT was on your watchlist instead of in your portfolio, the payoff over the last year may feel like a missed call. For NKT shareholders, the return over the past year was 25.8%, including dividends. That result followed a period when analysts were split on whether European grid modernization and high voltage capacity expansion could really translate into meaningfully higher margins. The key question is simple. What evidence at the start hinted that backlog quality, not just backlog size, might matter most?
On Simply Wall St, a Narrative is an investor's thesis written down: the reasoning, plus the numbers it rests on. Run those numbers and you get an estimated Fair Value.
NKT is not the only name tied to this theme. Zero in on 44 power grid technology and infrastructure stocks and compare how each one is priced.
The Argument You Would Have Been Weighing Up On NKT
The shares cost DKK673 at the start of the period, and the debate around NKT split into two clear stories built on the same grid boom but very different payoffs.
The bullish narrative put fair value at DKK843. It leaned on the idea that a shift to higher margin, recent vintage high voltage projects and new capacity in 2027 to 2028 could lift EBITDA margins well above guidance.
The more cautious view set fair value at DKK600. It focused on risks from heavy CapEx of about €2b through 2028, with execution setbacks or budget overruns seen as a potential threat to future returns.
What The Evidence Did To The NKT Argument
NKT’s record €13.5b order backlog and qualification of a 525 kV HVDC subsea system both supported the bullish bet on higher quality, high voltage work. Investor Day 2026 then reinforced the long term grid buildout story. Q2 2026 results told a cooler story, with revenue at €947m and net income at €51m and net margin unchanged at 5.4%. Overall, the evidence cut both ways.
The lesson is simple. When a thesis leans on “better backlog”, watch order backlog size, mix by product and the net margin that actually shows up in later reports.
What NKT's Price Now Asks You To Believe
NKT shares now trade at DKK892 after a 25.8% gain over the past year. The selected Narrative sees Fair Value below that level and anchors its caution in how contract mix, customer exposure and large projects might affect margins through this capex-heavy phase.
At this price you are effectively assuming NKT can turn its order book and expansions into steadier, higher quality earnings. The question is how the selected Narrative's concern about lower margin project work and rising execution risk shapes your view of that assumption.
"Increasing reliance on variation orders and subcontracted third-party work in the Solutions business is inflating near-term revenue figures, but these orders carry substantially lower margins and offer little sustained profitability, leading to a structural decline in group EBITDA margin and muted earnings quality through the project cycle."
Not everyone reads the same price the same way. → See the lower figure this Narrative lands on, and how it gets there
Where Could You Get There Earlier?
By the time a rally makes headlines, you are reading about returns someone else has already earned. Why not go straight to the source and look for your own contrarian opportunity? These three companies trade below our estimated value.
- Company 1 - 26% below our estimate - targets higher-spec power connectors as transmission upgrades require more capacity.
- Company 2 - 17% below our estimate - adds trade-focused branches and software that streamline ordering for professional installers.
- Company 3 - 42% below our estimate - replaces legacy tolling systems and supplies sonar that supports automated marine navigation.
Those are three of them. See the full list of 185 companies trading below our estimate →
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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