Nextpower Inc. (NXT): what the price requires
At today's price, Nextpower Inc. (NXT) is priced for +30.2% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/NXT
Headline
| Field | Value |
|---|---|
| Ticker | NXT |
| Company | Nextpower Inc. |
| Current price | $100.17/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 8.0% |
| Operating margin today | 20.7% |
| Margin compression implied | -12.7pp |
| Implied growth | 30.2% |
| Multiple paid | 20x operating income |
The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 12.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.1pp.
Reconcile: at the x-ray's 9.3% required return this reads ~15.1%/yr; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.43σ |
| cohort percentile (of 177 peers) | 35 |
| sustained it ~5 years at this level | 27% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.43x | 5 | expensive |
| Earnings | 2.54x | 5 | expensive |
| Relative | 1.31x | 5 | expensive |
| Growth | 0.78x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $147.88 | 0.68x | yes | FCF base $0.6B, growth 23% (input: historical growth), terminal g 4.0%, WACC 9.1%, 7yr projection |
| DCF Exit Multiple | Growth | $129.02 | 0.78x | yes | Exit EV/EBITDA: 19.2x / 21.2x / 23.2x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $88.50 | 1.13x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 17.9x / 22.0x / 26.1x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $41.15 | 2.43x | yes | BV/sh $15.17, ROE (TTM) 25.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $68.17 | 1.47x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $121.52 | 0.82x | yes | Rev $3.6B, growth 23% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.3x / 5.1x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $46.08 | 2.17x | yes | EPS $3.84, growth 12% (input: historical EPS growth), PEG=2.22 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $38.94 | 2.57x | yes | Normalized EBIT (4y avg op income, one-time charges added back) $0.53B × (1−6%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $60.87 | 1.65x | yes | BV $15.17 + 5yr PV of (ROE (TTM) 25.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $36.20 | 2.77x | yes | √(22.5 × EPS $3.84 × BVPS $15.17) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $76.46 | 1.31x | yes | EBITDA $0.70B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $39.45 | 2.54x | yes | FCF $513.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $31.00 | 3.23x | yes | SBC-adj FCF $0.39B (FCF $0.51B − SBC $0.12B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $103.83 | 0.96x | yes | EPS $3.84 × (8.5 + 2×11.9%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $13.33 | 7.51x | yes | BV $15.17 × (ROIC 8.0% / WACC 9.1%) |
| P/Sales Sector | Relative | $115.62 | 0.87x | yes | Revenue $3.56B × sector P/S 5.0x |
| PEG Fair Value | Relative | $68.43 | 1.46x | yes | EPS $3.84 × (PEG 1.5 × growth 11.9% (input: historical EPS growth)) → PE 17.8x |
| Earnings Yield | Earnings | $41.51 | 2.41x | yes | EPS $3.84 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $1.1b |
| Net debt / NOPAT (after-tax) | -1.67x (net cash) |
| Net debt / operating income (pre-tax) | -1.58x (net cash) |
| Share count CAGR (dilution) | 1.9% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Nextracker makes the ground-mounted tracking systems that tilt utility-scale solar panels toward the sun, and it does it with no debt and over $1 billion of net cash while earning a 25% return on equity, an unusual combination of growth and balance-sheet strength.
- The defining risk is the price: at $126 the stock trades above every valuation method except the growth-based ones, so it requires the recent 40%-plus revenue growth to persist for years rather than fade.
- The number to watch is the backlog, which exceeded $5 billion at the most recent quarter end, the forward order book that has to convert into revenue to validate the growth the price assumes.
Bull Case
The moat here is not the steel; it is the software and the scale that sit on top of it. Nextracker sells single-axis trackers, the structures that pivot solar panels to follow the sun and lift the energy yield of a utility-scale plant, but the durable advantage is its position as the largest player in the category, its installed base, and the control systems and yield-optimization software that make its hardware sticky once a developer standardizes on it. That shows up directly in the returns: a 25.1% return on equity and a 19.6% operating margin, earned while carrying zero debt and more than $1 billion of net cash. A commodity steel-bender does not earn a 25% ROE. The economics say the company captures real, defensible value in a market most people assume is a race to the bottom.
The growth is both fast and well-funded. Trailing revenue runs about $3.6 billion, and the most recent quarter grew 42% year on year to $905 million, with U.S. revenue up 49%. Crucially, this growth is self-financed. The company generates roughly $514 million of free cash flow and holds it as net cash rather than borrowing to grow, which means it can invest in domestic manufacturing, win share through supply agreements like the recently secured multi-year module-frame deal exceeding $75 million, and weather a demand air pocket without the refinancing risk that sinks levered industrials.
The forward visibility is the clincher. Backlog exceeded $5 billion at quarter end, with bookings described as record across product lines, and management guided fiscal 2026 revenue to $3.275 billion to $3.475 billion. A backlog larger than a full year of revenue, in a business with multi-year project timelines, is the kind of forward order book that converts a growth story from hope into schedule. Add the U.S. manufacturing tax credits flowing through the model, roughly $67 million net in the most recent quarter, and Nextracker is a profitable, cash-rich, share-gaining leader in a structurally expanding market.
Bear Case
The competitive threat is real and it is specific. Nextracker leads the single-axis tracker market, but it is not alone in it: Array Technologies competes directly in the same utility-scale projects, GameChange Solar and a growing field of lower-cost manufacturers chase the same developers, and trackers are ultimately steel structures with control electronics, a product that invites price competition once the patents and the software lead narrow. The bull case rests on the moat being durable; the bear case is that a hardware-led category with deep-pocketed rivals erodes pricing over time. Every utility-scale solar project runs a competitive bid, and a tracker supplier wins or loses on price as much as on yield software. If a competitor matches the yield optimization at a lower system cost, the share gains reverse.
The second concern is the demand environment that surrounds the company. Utility-scale solar is exposed to interest rates, which set the cost of financing every project, and to policy, where the U.S. manufacturing tax credits that currently add roughly $67 million a quarter to the model are a function of legislation that can change. A meaningful share of the company's recent margin and growth is tied to incentives and tariffs that a future policy shift could compress. Customer concentration in large developers compounds the risk: a handful of big projects slipping or repricing moves the numbers more than a diversified revenue base would.
Then there is what the price requires. At $126, only the growth-based methods reach the stock; the asset, earnings-power, and peer-multiple methods all land well below it, several near a third of the price. To justify the valuation, Nextracker has to keep compounding operating profit at something close to the high-30s percent rate it has recently shown, and history is unkind to companies asked to sustain growth that fast for long. The order book supports the near term, but the price is underwriting durability of a growth rate that fades for almost everyone eventually. If growth decelerates toward the sector norm before the backlog suggests, the multiple, currently above 25 times earnings, compresses toward the static methods that say this is a richly valued stock.
Valuation
The price is making a clear, single bet: that Nextracker keeps growing fast for a long time. Working the price backward, it embeds operating-profit growth near 38% a year, against a company already earning a 19.6% operating margin. That is an elevated requirement, the kind that history shows fades for most companies that reach it. The stock is not priced as a steady industrial; it is priced as a durable compounder, and the entire question is whether the growth persists or reverts.
The methods split cleanly, and the split is the signal. Only the growth-based approaches, the discounted cash-flow and future-market-cap models, reach the price; they get there by extending the recent 20%-plus growth forward. Every other family lands below. The asset methods sit near a third of the price, the earnings-power methods around a third as well, and the peer multiples below it. When only the forward-growth family reaches the price, the premium is a durability bet that the static methods structurally cannot frame, because they capitalize today's earnings without crediting the compounding the order book implies. The spread between the growth methods and the static ones is the exact size of that durability premium.
The balance sheet is the part that lowers the risk of the bet rather than raising it. Nextracker carries no debt and more than $1 billion of net cash, generates positive free cash flow, and funds its growth internally. There is no solvency question here; the downside is valuation, not survival. Against tracker and solar-equipment peers, the implied multiple of roughly 26 times earnings is at the premium end, justified only if the share gains and backlog conversion continue. The decisive judgment is duration: a buyer at this price is paying for years of sustained high growth, and the backlog buys visibility into the near term but not the full horizon the price assumes.
Catalysts
The backlog conversion is the catalyst that matters most. Bookings hit record levels and backlog exceeded $5 billion at the most recent quarter end, a forward order book larger than a full year of revenue that now has to translate into shipped, recognized revenue on schedule. Each quarterly print is a read on whether the order book is converting at the pace the price assumes.
The near-term numbers are running hot. Second-quarter fiscal 2026 revenue reached $905 million, up 42% year on year, with U.S. revenue up 49%, and management guided full-year fiscal 2026 revenue to $3.275 billion to $3.475 billion. Domestic manufacturing is a recurring theme: the company secured a multi-year module-frame supply agreement exceeding $75 million to deepen U.S. content, and roughly $67 million of net manufacturing-credit and tariff benefit flowed through the quarter.
The policy backdrop is the swing factor to monitor. The U.S. manufacturing tax credits and tariff structure that currently support margins are legislated, so any change to solar incentives or trade policy would directly affect both the growth rate and the profitability the price is underwriting. Interest-rate moves, which set the financing cost for every utility-scale project, are the other external variable that can accelerate or stall the demand the backlog reflects.
Peer Cohorts (Per Segment, With Filing Citations)
Solar tracker systems and software (reported)
- SEDG (SolarEdge Technologies Inc)
- (no filing in the citation store)
- ENPH (Enphase Energy Inc)
- (no filing in the citation store)
- FSLR (First Solar Inc)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Nextracker Q2 FY2026 results, October 2025 · Nextracker fiscal 2026 guidance · Nextracker fiscal 2026 guidance and Q2 FY2026 results, October 2025