Nextracker: Upgrade Guidance and Valuation Amid Growth

Nextracker, a solar tech leader, has reported upgraded guidance, growth, and a valuation that makes it a strong buy. Despite a 7% drop in the market, the stock is still up 60% YTD. The pullback is seen as unwarranted and will likely be short-lived, making it a good time to buy.

Nextracker Inc. (NASDAQ:NXT), a leading provider of solar tracking technologies and solutions, reported strong quarterly results and upgraded guidance for FY26, making it a compelling investment despite a recent market pullback. The stock, down around 7% the morning after reporting, remains up over 60% year-to-date (YTD).

The company's Q2 FY26 earnings included a non-GAAP EPS of $1.16, beating expectations by $0.13 and up year-over-year (YoY) by 25%. Revenue came in at $864 million, up 20% YoY. While revenue dropped from the previous quarter, the company highlighted significant growth in backlog and market share. The total backlog exceeded $4.75 billion, up almost 5x in under five years and a 42.5% YoY increase [1].

Nextracker's strong performance is driven by its robust global presence and leadership in the solar industry. The company leads in global market share, with a 26% share and number one market position in Europe. This leadership, coupled with a strong operating margin of 21.5%, positions Nextracker as a key player in the growing solar energy sector [1].

Moreover, Nextracker has been investing in advanced technologies, including AI and robotics, to enhance its solar power plant deployment and digital platforms. The company has deployed millions of sensors and nodes across 40 countries on about 100 GW of operating systems. This investment in innovation positions Nextracker well for future growth [1].

Despite the recent market pullback, analysts remain optimistic about Nextracker's prospects. The company has outperformed its industrial peers in the solar technology industry, with the highest revenue growth, EBITDA, and income margins. Additionally, Nextracker's valuation remains attractive, with a PE ratio of 18.73, lower than its competitors and the sector average [1].

The recent market pullback is seen as unwarranted, providing a good buying opportunity for investors. Nextracker's strong fundamentals, leadership position, and investment in innovative technologies make it a solid choice for investors looking to capitalize on the growing solar energy sector.

References:
[1] https://seekingalpha.com/article/4806675-nextracker-buy-solar-tech-leader-upgraded-guidance-growth-valuation