Nextracker's Q1 Surge: Why Solar Trackers Are the Next Growth Engine in Renewables

The renewable energy sector is in the throes of a historic boom, with global solar capacity set to triple by 2030. At the heart of this transition lies one critical technology: the solar tracker. And no company embodies the potential of this space better than Nextracker (NASDAQ:NXT), which just delivered a Q1 earnings beat that underscores its dominance in a $200 billion market.

Nextracker’s 25.5% year-on-year revenue growth to $924.3 million not only crushed estimates but also highlighted its ability to capitalize on secular tailwinds. The company’s backlog now exceeds $4.5 billion—up 12.5% year-on-year—locking in future revenue visibility that few peers can match. This is no fleeting success: management raised full-year guidance to a midpoint of $3.3 billion, 3.7% above analyst expectations, signaling confidence in its ability to scale alongside the industry’s growth.

Why Nextracker Outperforms: Technology, Scale, and Margin Resilience

Nextracker’s leadership stems from its proprietary solar tracker technology, which boosts energy yield by up to 20% compared to fixed panels. This efficiency advantage is critical as utilities and developers prioritize Levelized Cost of Energy (LCOE) reduction. In Q1, the company launched its NX Horizon Low Carbon Tracker, the first fully recyclable tracker system, aligning with global decarbonization mandates.

The financials are equally compelling. While Generac’s (GNC) revenue grew just 6% year-on-year and EVgo’s (EVGO) 36% growth was overshadowed by margin pressures, Nextracker’s adjusted EBITDA margin expanded to 26.2%, fueled by operational leverage and IRA tax incentives. This margin resilience is a stark contrast to peers: Generac’s net income dipped due to supply chain costs, and EVgo’s Adjusted EBITDA remains in negative territory.

Valuation: A Bargain in a High-Growth Sector

Nextracker’s stock currently trades at a P/E of 9.88x, far below the renewable energy sector’s Q1 average of 21.6x. This discount is irrational given its superior execution and backlog strength. Even as the sector’s valuation has fluctuated—reaching 27.3x by May—the company’s fundamentals suggest it’s undervalued relative to its peers.

The math is simple: Nextracker’s backlog growth (54% over two years) outpaces revenue growth, and its capital-light model (24.6% free cash flow margin) generates liquidity without dilution. Meanwhile, competitors like Generac and EVgo face margin headwinds or underpenetrated markets.

Risks Mitigated by Execution

Bear arguments often cite supply chain volatility and project delays. Yet Nextracker has mitigated these risks through strategic manufacturing partnerships (e.g., JM Steel in Pittsburgh) and acquisitions like Ojjo, which address geotechnical challenges in utility-scale projects. The company’s 1% annual backlog dropout rate—among the lowest in the sector—proves its ability to deliver.

The Bottom Line: Buy Now Before the Market Catches On

Nextracker’s 24.7% YTD stock performance is just the beginning. With $4.5 billion in backlog, margin expansion, and a valuation that ignores its growth profile, this is a rare opportunity to invest in a company positioned to dominate a $1.2 trillion market.

The sector’s P/E multiple may ebb and flow, but Nextracker’s fundamentals are unshakable. At 9.88x earnings, this is a buy—not just for its Q1 results, but for its role in powering the clean energy revolution.

Act now before the consensus catches up. The sun is rising on Nextracker—and it’s time to shine with it.