Nextracker Inc. (NASDAQ:) is a global leader in the solar tracker and software solutions industry. Revenues from the U.S. is approximately 66% and the rest from the international market. The main product line of the company is the NX Horizon smart solar tracker system, while its software solutions leverage the embedded solar tracker sensors, communication and control capabilities. NXT has a market cap of $8.57 billion and is currently trading at $57.11. Its software solutions use advanced algorithms and AI to optimize the performance and capabilities of its tracker products. The company’s products are primarily used in utility-scale projects, which means a more stable revenue stream. So, I rate the stock as BUY based on the following reasons: the company’s momentum and its technologically advanced solutions.

Market Prospects ### **Overview of industry** Solar tracker is a competitive industry with many other players striving to gain market share. Specifically, NXT is the leader of industry with market share of 23% in 2023, as mentioned in this . According to the company, its main competitor is Array Technologies (). It also competes with FTC Solar (), Arctech Solar and Soitec (). Markets prospects for solar trackers are more than solid. The global market was valued at $7.88 billion in 2023 and is projected to grow to $25.24 billion by 2032, exhibiting a CAGR of 14.32% over the same period, as this illustrates. Also, North America is projected to grow significantly, reaching an estimated value of $9.58 billion by 2032. NXT is well positioned to capitalize on these market prospects and continue to expand its leading market share and revenue.

Fortune Business Insights Financial Analysis and Momentum ### Financial Analysis Nextracker has a very healthy and strong financial record. The table below illustrates that the company’s revenue has grown consistently from FY20 through FY24. Meanwhile, its debt has remained at very low levels. More specifically, revenue has recorded an average annual growth rate of 21% over the same period. Additionally, the company’s debt consists mainly of long-term lease liabilities. This debt structure provides NXT with the flexibility to navigate through periods of financial stress more easily and less costly, without losing its overall ability to remain profitable. Company's Financial Filings The company’s profitability is already proven, as the table below illustrates. NXT recorded an average annual profit growth rate of about 59% from FY20 through FY24. Company's Financial Filings This strong profitability is mainly driven by the company’s low operating expenses, which its 5-year average is at 5% of total revenue -a signal that NXT has an efficient business model. Therefore, both its operating margin and its profit margin are at high levels, and they also appear to have an upward trend, as the table below indicates. Company's Financial Filings ### Momentum Here, I need to mention the positive Nextracker momentum. NXT operates in an industry where projects typically have a long-term horizon, making the company’s backlog a key performance indicator. According to this , NXT has consistently increased its backlog. This is a signal that the company’s products and services have strong demand. Investors have every reason to expect this positive trend will continue, as the below chart indicates. Moreover, countries and regions around the world have already shifted their priorities toward cleaner energy and have implemented regulations to support this transition. Great examples are and -both regions where NXT operates. As a result, the company’s momentum remains positive and is expected to boost its future revenue growth.

PV Tech Valuation and Target Price ### **Valuation Metrics and Peers** Considering the nature of the industry, it is better to focus on specific key valuations metrics and do a comparison with its main competitor. Seeking Alpha Starting with EV/EBITDA and P/E ratios, both indicate that NXT is slightly overvalued than its competitor, as shown in the table above. However, the FWD P/E indicates an undervalued company, reflecting analysts’ expectations of high revenue growth. These expectations are also reflected in the 5-year CAGR, which is expected to reach approximately 20%, compared to just 1.8% for ARRY. However, the PEG ratio again indicates a slightly overvalued company, but this looks reasonable considering the strong future prospects that NXT holds compared to its peer.

### **Target Price and Assumptions** NXT’s target price calculated using DCF and EV/EBITDA models. ### **DCF Model** Assumptions are based on macroeconomic factors. According to this , PV Solar technology expected to account for 80% of the growth in global renewable capacity between 2024 and 2030. Furthermore, the same analysis highlights that the cost of electricity generated from solar panels has declined dramatically over recent decades -a key reason why NXT’s margins have shown an upward trend, as previously mentioned. International Energy Agency (IEA) Additionally, nearly 140 countries have implemented climate and energy security policies, as this indicates. Further enchantment of this momentum is that global energy demand is projected to grow between 11% - 18% by 2050, according to this . Most of this growth is expected to come from emerging economies, where populations are growing. Moreover, new sectors, such as data centers, need massive energy power. As a result, the projected growth in power consumption is significant, as the table below illustrates. McKinsey & Company Take into account, the market’s expected CAGR of 14.32%, as above mentioned, a projected CAGR of 14.8% through 2030 seems reasonable. Also, the projected CAGR is in line with the company’s historical performance, as calculated from FY19 to FY24- as shown in the table below. Therefore, the mentioned expected CAGR seems to be also conservative. Analysis's results In order to achieve the most reliable growth rate assumptions for the key components of the DCF calculation, historical data from the five most recent years was used. The table below illustrates the average percentage of revenue for each component, as calculated over the same period. Analysis's Results Finally, adjustments for non-cash charges, such as depreciation - stock-based compensation expense and deferred income taxes - were also taken into consideration, using with the same approach as above to calculate the final DCF target price. Based on the above assumptions and methodology, the DCF valuation results are summarized in the table below: Analysis results ### **EV/EBITDA Model** According to Seeking Alpha valuation metrics, NXT trailing EV/EBITDA ratio is 11.87, which is below the sector's median by 9.86% (sector median is 13.17). Additionally, NXT is a growth company, recent valuation ratios seem to be more representative; therefore, I based my analysis on the average EV/EBITDA multiple over the last quarters, as illustrated in the table below, and a ratio of 10.70% appears more reasonable for valuation calculations. Seeking Alpha The above CAGR and ratio, based on the assumptions of tariffs, will continue to be in low-level range and no crucial geopolitical event take place in the next 5 years. Also, a WACC of 7.90% and effective tax rate of 22.10% used to calculate the implied enterprise value. Based on the above assumptions and methodology, the EV/EBITDA valuation results are summarized in the table below: Analysis results Based on the above models, NXT's target share price is summarized as follows: Analysis's Results However, given the company’s proven track record and the strong potential of its industry, it is more reasonable to have more confidence in the DCF results. For this reason, the average of the above price estimates has been selected and the final target share price is $93.33. Risk Analysis Risk analysis includes two main risks: Geopolitical Risk and Competition ### **Geopolitical Risk** According to the company, a significant portion of its steel is derived directly or indirectly from steel mills located in China. Tariffs between the U.S. and China could have a significant impact on NXT’s revenue and growth. The recent trade tensions between the most advanced economies - including the United States, Europe and China - could affect the company’s supply chain, increasing its input costs. High tariffs and supply chain disruptions may have as impact in lower revenues, and is an aspect that the company can’t handle it with easy or cost-effective way. ### **Competition** As already mentioned, NXT operates in a very competitive industry. Therefore, its products and software must be able to differentiate the company from its competitors and attract customers. For this reason, any misleading services or the loss of one of its major clients could also negatively affect NXT’s revenue and growth. The company relies on large clients - as already mentioned, NXT provides solutions to utility-scale projects. According to its annual report, a single customer accounts for 17% of total revenue, according to its annual report. Therefore, NXT has high dependence on a few key customers. Conclusion In conclusion, NXT is an undervalue stock with a leading position in the solar tracker industry and solid financials, with an attractive track record. NXT can use its flexible debt structure to continue delivering high-quality solutions and beat its peers. Moreover, NXT offers technologically advanced AI-based software solutions, which is a competitive advantage. Given all the above, its current price looks attractive considering the long-term revenue prospects and is a buy option in my opinion.

Nextracker: Leading The Solar Boom With Advanced Technology Solutions (NASDAQ:NXT)

Nextracker Inc., a global leader in solar tracker and software solutions, reports strong financial performance, market leadership, and growth prospects in the solar energy sector. The company has a market cap of $8.57 billion and is projected to grow at 14.32% CAGR through 2032, driven by demand for renewable energy and AI-powered technology. Analysts rate the stock as a 'BUY' due to its competitive position, efficient business model, and favorable industry trends.