• Nextracker is revolutionizing the solar industry with tracking technology that boosting energy efficiency by up to 40%.
• That’s how the company is setting new standards for large-scale solar projects.
• Plus, it has delivered strong growth in earnings, with a $4.5 billion backlog and $622 million in free cash flow for FY2025.
• It combines strong fundamentals, a promising product pipeline and a solid market position.
• Think of it as a compelling investment opportunity despite near-term policy-related risks.

Nextracker (NXT) isn’t just riding the solar wave — it’s driving it. The company’s groundbreaking solar tracking is reshaping renewable energy technology by enhancing solar panel efficiency by up to 40%. Following strong earnings and a robust backlog, it has cemented its place as a leader in the solar market.

But growth in this high-demand sector doesn’t come without challenges. While Nextracker is well-positioned, the solar industry faces risks ranging from regulatory uncertainty to the potential negative effect of tariffs on key components. These factors could introduce volatility, especially with shifting energy policies under the new administration and rising global trade tension.

Today, we look into Nextracker and gauge whether it can sustain its impressive growth trajectory, or if market conditions might cause its stock to take a breather.

Powering the future of solar energy

Nextracker, an emerging leader in solar tracking, operates from headquarters in San Jose, California. It enables solar panels to follow the sun’s movement, boosting energy production by up to 40% compared to fixed-tilt installations. This breakthrough is essential as the world shifts toward renewable energy, and the company sits at the heart of this transformation. Since spinning off from Flex Ltd. in 2023, the company has rapidly expanded, establishing a solid presence in the US, Europe and Asia.

The innovations don’t stop with hardware. Nextracker offers software like its TrueCapture technology, which optimizes energy yield by accounting for variables like weather, shade and terrain. The software helps improve energy efficiency and lower costs for solar developers — capabilities that differentiate the company in a fiercely competitive market. The company’s solar trackers are now deployed in some of the world’s largest solar projects, from the Al Kahfah Solar Park in Saudi Arabia to the Malindi Solar project in Kenya. 

Despite operating in a rapidly growing market, Nextracker faces challenges that could affect its near-term growth. Regulatory uncertainty surrounding the Inflation Reduction Act (IRA) and rising tariffs on solar panels are making some investors pessimistic about the industry. However, the company’s asset-light business model and 100% US domestic content offer a strategic advantage. This enables the company to navigate tariff-related headwinds more easily than many of its peers. The company’s leadership is confident of its ability to manage these challenges, backed by a robust portfolio of products, strong customer demand and a growing backlog of over $4.5 billion.

The company’s growth strategy combines organic innovation with strategic acquisitions, such as its recent purchase of Bentek, an electrical balance of systems (eBOS) business. This acquisition moves Nextracker closer to offering comprehensive turnkey solar plants, expanding its product offerings and market reach. This forward-thinking approach not only strengthens the company’s position as a leading supplier but also positions it as a formidable competitor in the broader solar energy value chain, giving it the flexibility and scale to meet the growing global demand for renewable energy. The US solar market alone added 50 gigawatts of capacity in 2024, and that growth is expected to continue at a rapid pace in the coming years, and the company stands to capture a significant share of this expanding market. 

Solid earnings and strong overall financial position

Nextracker continues to demonstrate strong financial performance, reflecting both robust demand and effective execution. In Q4 FY2025, the company reported record revenue of $924 million, a 26% year-over-year increase. For the full fiscal year, the company surpassed $3 billion in revenue, growth of 18% compared to the previous year. The stock has also surged nearly 50% year-to-date, highlighting investor confidence in the company’s growth trajectory and market position.

Profitability remained strong, with adjusted EBITDA rising 52% in Q4 to $242 million, and full-year adjusted EBITDA reaching $776 million, up 49% from FY2024. Nextracker also reported a solid adjusted gross margin of 33% in Q4, despite a slight dip from the previous quarter. Adjusted diluted EPS last year was $4.22, marking a 38% increase year-over-year and demonstrating the company’s ability to drive profitable growth even as it scales.

A standout strength in Nextracker’s financials is its ability to generate robust free cash flow. In the past year, the company delivered an impressive $622 million in free cash flow, underscoring its financial strength and operational efficiency. Coupled with a liquidity position of approximately $1.7 billion, the company is well-equipped to fund growth initiatives and pursue strategic acquisitions. This solid financial foundation also enabled the company to retire $150 million in debt, strengthening its balance sheet and enhancing its capacity to capitalize on opportunities.

Looking ahead, Nextracker projects revenue between $3.2 billion and $3.4 billion in the current fiscal year, reflecting continued growth despite a challenging macroeconomic environment. The company’s strong backlog, global expansion and innovative product offerings provide a solid foundation for these projections, although increased operational investments and policy risks remain considerations for the year ahead.

A strong growth play, but not without risks

Nextracker offers a compelling investment opportunity, fueled by its strong foothold in the rapidly growing solar energy market. With its impressive valuation and potential for attractive upside, the company is well-positioned for growth — though risks tied to shifting policies that investors should keep in mind.

Currently, Nextracker’s P/E ratio of 16.6 is considerably lower than the sector median of 23.6, indicating the stock is priced at a discount compared to industry peers. This lower P/E ratio reflects some market concerns over regulatory uncertainties and potential tariff headwinds in the broader solar sector. However, it also suggests the company’s stock is reasonably priced relative to its potential for growth. The company’s price-to-sales (P/S) ratio of 2.8, above the sector median of 1.5, aligns with its status as a high-growth company in a rapidly expanding market. Meanwhile, its price-to-book (P/B) ratio of 5.2, while higher than the sector median of 2.9, is arguably justified by its technological differentiation and expanding global footprint. 

In terms of market sentiment, 29 analysts follow Nextracker, with 21 rating it as a “buy” or “overweight,” reflecting strong confidence in its long-term growth. The stock’s average price target of $64 per share suggests a 10% upside from its current price of around $58, implying solid potential for price appreciation. Moreover, the company’s strong domestic manufacturing capabilities, including 100% US domestic content for its solar trackers, offer insulation from tariffs on its core products provide an edge over competitors. However, it is still exposed to potential tariffs on other solar components, like panels and batteries, which could affect project costs and timelines.

Despite these risks, Nextracker’s solid fundamentals position it as a strong growth play. The company’s $4.5 billion backlog provides a steady revenue stream, while $622 million in free cash flow for FY2026 ensures it has the financial resources to fuel continued expansion. With robust liquidity and no debt, the company is well-equipped to navigate uncertainties and seize growth opportunities, especially through strategic acquisitions like privately held Bentek, which Nextracker bought last month in an all-cash transaction.

Investment takeaways

Nextracker stands out as a prime growth opportunity in the solar sector, driven by its market-leading solar tracking technology and strong financial performance. With innovative products like its proprietary TrueCapture software and NX Horizon Hail Pro trackers, the company is firmly positioned at the forefront of the global solar energy transformation.

Despite near-term uncertainties around the Inflation Reduction Act (IRA) and potential tariffs on solar panels, Nextracker’s domestic manufacturing and 100% US content for its trackers provide a distinct advantage over competitors. This strategic edge reduces exposure to tariffs on core products, mitigating risks that many of its peers face. Investors’ sentiment is strong, with 21 of 29 analysts rating the stock as a “buy” or “overweight,” reflecting confidence in the company’s long-term prospects for growth. Moreover, with a P/E ratio of 16.6, well below the sector median, the stock appears attractively priced given its growth potential.

Bottom line: Nextracker is growing rapidly, driving profitability and positioned to benefit from growth in the industry. For long-term investors, the company offers a solid opportunity to capture the secular growth of solar energy. Considering the company’s strong fundamentals and competitive positioning, we rate its shares a “buy,” with the understanding that policy-related risks could introduce near-term volatility.

Andrew Prochnow, Luckbox analyst-at-large, has traded the global financial markets for more than 15 years, including 10 years as a professional options trader.

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