Nextracker (NXT)

Nextracker Inc is operating in a rapidly expanding market with multiple positive factors contributing to revenue and profitability growth. The company has significant market share in solar trackers and very positive operating and earnings results. I think their poised to due well as capital costs come down and solar begins to scale again.

Valuation Ratios:

• Price/Earnings: Very low 12.7
• Price/Sales: Increased from 0.9 to 3.2.
• Price/Book Value: Increased from -0.5 to 8.2.
• Price/Cash Flow: Increased from 13.5 to 25.5.

Profitability Ratios:

• Gross Margin: Improved from 15.3% in 2022 to 27.8% in 2023.
• Profit Margin: Improved from 6.3% in 2022 to 12.3% in 2023.
• Return on Equity: Improved significantly from -3.9% in 2022 to 31.9% in 2023.
• Return on Assets: Improved from 8.4% in 2022 to 12.2% in 2023.

Earnings Per Share:

• EPS (TTM): Improved from $0.03 in 2022 to $3.97 in 2023.

Revenue and Profit Growth:

• Revenue: Increased from $1.9B in 2022 to $2.5B in 2023.
• Net Income: Increased significantly from $1M in 2022 to $306M in 2023.

Assets and Liabilities

• Current Assets: Increased from $872M in 2022 to $1.768B in 2023
• Current Liabilities: Increased from $507M in 2022 to $891M in 2023.
• Long-Term Debt: Increased from $149M in 2022 to $158M in 2023.

Cash Flow:

• Operating Cash Flow: Improved significantly from $107.7M in 2022 to $428.9M in 2023.

Summary:

• Strengths:  Strong profitability ratios, significant growth in earnings per share, and substantial improvements in revenue, net income, and operating cash flow
• Weaknesses: Potential overvaluation indicated by high P/S and P/B ratios, rising current liabilities, and the modest increase in long-term debt

Growth and Opportunity:

• Backlog: Increased quarter-over-quarter to over $4 billion, providing strong visibility into future revenues.
• Market Expansion: The solar tracker market is expected to grow from $8.7B in 2024 to $25B by 2032, with a CAGR of 14.3%.
• Solar Installations: New solar panel installations are expected to surpass 400GW annually by 2024 and 600GW by 2028.
• Limited Competition: Unlike other PV-related market segments, the solar tracker market faces less competition from Chinese companies, with about 50% of production in the US.

Risks:

• Revenue Concentration: Significant concentration of revenues from top customers, with the top 5 customers accounting for over 40% of total revenues.

Position: 75 shares at $38.21