Is Nextracker (NXT) the Cheap New Stock to Buy Right Now?

Nextracker (NXT), a leading provider of solar tracker and software solutions, has been making waves in the renewable energy sector. With a market capitalization of $5.97 billion and a strong financial track record, investors are wondering if Nextracker is the next big thing in the solar industry. Let's dive into the company's financials, growth prospects, and potential risks to determine if Nextracker is the cheap new stock to buy right now.



Financial Performance and Valuation

Nextracker's revenue has been growing consistently over the past few years, with a compound annual growth rate (CAGR) of 31.42% from 2021 to 2023. The company's earnings have also seen significant growth, increasing by 26692.74% during the same period. These impressive financial results have caught the attention of analysts, who have given Nextracker a strong "Buy" rating and a 12-month stock price forecast of $52.21, indicating a 27.34% upside from the latest price.

Nextracker's valuation metrics suggest that the stock may be undervalued compared to its competitors in the solar industry. The company's P/E ratio of 10.25 is lower than the industry average of 15.75, and its forward P/E ratio of 12.18 is also lower than the industry average. Additionally, Nextracker's P/S ratio of 2.13, P/CF ratio of 9.70, and EV/MC ratio of 0.90 indicate that the stock may be relatively cheap compared to its sales, cash flow, and market capitalization.



Growth Prospects and Analyst Estimates

Nextracker's future growth prospects look promising, with analysts expecting the company's earnings to continue to rise. The average rating for NXT stock is "Buy," and the 12-month stock price forecast is $52.21, which is an increase of 27.34% from the latest price. This positive outlook suggests that analysts expect Nextracker's revenue growth and profitability to remain strong in the coming years.

Risks and Challenges

While Nextracker's financial performance and growth prospects are impressive, the company faces several risks and challenges that could impact its stock price and investment potential. Some of the primary risks and challenges include:

1. Supply Chain Disruptions: Nextracker has warned about potential supply chain disruptions due to attacks on cargo ships in the Red Sea, which could delay deliveries to the UK by up to two-and-a-half weeks. This could negatively impact sales and profit, affecting the company's stock price and investment potential.
2. Economic Downturns: Economic downturns can lead to reduced consumer spending on discretionary items like solar panels, which could impact Nextracker's sales and profitability. The company's stock price and investment potential could be affected by such economic conditions.
3. Policy Changes: Changes in government policies, such as tax hikes, can impact consumer spending and the demand for solar energy, which could affect Nextracker's sales and profitability. The company's stock price and investment potential could be influenced by policy changes.
4. Revenue Growth Deceleration: Nextracker's revenue growth is forecasted to decelerate in FY 2026 due to elongating backlog conversion and contracting book to bill ratio, which could impact the company's financial performance and stock price.
5. Market Competition: Increased competition from traditional toy companies like Hasbro and tech companies like Microsoft and Sony could impact Nextracker's market share and profitability, affecting the company's stock price and investment potential.



Conclusion

Nextracker's strong financial performance, impressive growth prospects, and undervalued valuation metrics make it an attractive investment opportunity for those looking for a cheap new stock in the solar industry. However, investors should be aware of the potential risks and challenges facing the company, such as supply chain disruptions, economic downturns, policy changes, revenue growth deceleration, and market competition. By carefully considering these factors, investors can make informed decisions about whether Nextracker is the right investment for their portfolios.