$23.86
$45.84
bear $23.86
base $34.68
bull $45.84
margin of safety $20.00
market price* $80.04
Nextpower (formerly Nextracker, renamed in November 2025) designs and sells solar trackers: steel structures that turn utility-scale solar panels to follow the sun. It is the largest tracker supplier in the market and also sells software (TrueCapture), electrical balance-of-system equipment, foundations and robotics, which grew to about 12% of revenue in fiscal 2026 (year ended March 31, 2026). Manufacturing is largely outsourced to steel fabricators, so the business needs very little capital: equipment spending was about 1.4% of revenue. Revenue rose from $1.2 billion in fiscal 2021 to $3.56 billion in fiscal 2026, and the order backlog was over $5 billion at year end. About 77% of fiscal 2026 revenue came from the United States (up 34%), with the rest of the world down 11%, mainly on lower Latin American shipments. Cash earnings. We measure the cash the owners could take out each year: operating cash flow with working-capital swings removed, stock-based pay treated as a real cost, and only the equipment spending needed to maintain the business. On that basis owner earnings were $462 million in fiscal 2024, $507 million in fiscal 2025 and $609 million in fiscal 2026 ($3.14, $3.39 and $3.99 per diluted share). Years before the February 2023 IPO, when the company was part of Flex and much smaller, are not used as the base. The key accounting judgement concerns a federal manufacturing tax credit, Section 45X. The credit is earned on U.S.-made torque tubes and structural fasteners in Nextpower's trackers, and the company books it as a reduction in cost of sales. It was worth $379.9 million before tax in fiscal 2026 and $224.9 million in fiscal 2025. After tax, that is roughly half of fiscal 2026 earnings. We count the credit as real cash. It is collected through supplier rebates and credits assigned against federal tax, and the unpaid balance ($352.6 million at March 31, 2026) is treated as a normal receivable. By law, though, the credit is paid in full only through 2029, drops by 25% a year in 2030, 2031 and 2032, and ends after 2032. We therefore value it separately, on that legal schedule, and it goes to zero. Without the credit, underlying earnings have not grown with revenue. They were about $365 million in fiscal 2024, $322 million in fiscal 2025 and $284 million in fiscal 2026, held back by tariffs that rose to $130.4 million in fiscal 2026 from $19.7 million the year before and were not fully passed on in prices, and by higher R&D and acquisition costs. The second statutory driver is demand. The July 2025 tax law (OBBBA) ends the federal investment and production credits that U.S. solar project owners rely on. Projects must have started construction by July 4, 2026 and be finished within four years, or be placed in service by December 31, 2027. Treasury also tightened the start-of-construction test in August 2025. That supports U.S. volumes through about 2030, which the backlog reflects, and removes the subsidy after that. Base case: underlying earnings of about $305 million a year through fiscal 2030. This is between fiscal 2025 and fiscal 2026 levels, because first-quarter fiscal 2027 profit rose 5% on 8% higher revenue despite a full quarter of tariffs. The 45X credit stays at the fiscal 2026 level (about $300 million after tax) through calendar 2029, then follows the legal phase-down, cut further as U.S. volumes fall. After the construction window closes, U.S. volumes decline and underlying earnings settle about 30% lower, near $215 million. That level rests on the business's unsubsidized sales in Europe, the Middle East, Africa, Australia, India and Latin America and on its leading position in a product that has become standard for utility-scale solar. The case runs 30 years. No growth is credited: the backlog secures volume, not a rising profit, and new products and acquisitions have not yet shown they add earnings. Year one of the base case is about 3.6% above fiscal 2026, against actual growth of about 17% in fiscal 2026. As the receivable runs off, the credit balance comes back as cash. The business is worth about $4.83 billion. There is no bank debt. We add about $845 million of cash beyond operating needs and subtract about $255 million for the present value of the $393 million owed to former owners under the tax receivable agreement, plus about $40 million of acquisition earn-outs and deferred payments. Equity is about $5.38 billion, or $34.68 per share on 155.1 million diluted shares. Bear case: tariffs stay unrecovered, so underlying earnings hold at the fiscal 2026 level of about $270 million. U.S. volumes start falling after 2027 for projects that miss the safe harbor, and underlying earnings settle near $150 million. Foreign-ownership rules for suppliers (interim Treasury guidance of February 2026) and lower volumes cut the 45X credit about 20% below the fiscal 2026 level before the legal phase-down. The case runs 20 years. The business is worth about $3.15 billion. After the same cash and obligations, equity is about $3.70 billion, or $23.86 per share. Bull case: the tariff cost is largely passed through, bringing underlying earnings back to fiscal 2024's roughly $365 million through fiscal 2031. Shipments from the backlog lift the 45X credit about 10% above fiscal 2026 before the legal phase-down. After 2030, underlying earnings settle about 15% lower, near $310 million, for 40 years. The business is worth about $6.56 billion, and equity about $7.11 billion, or $45.84 per share. We did not assume that tracker prices rise to make up for the lost credit once it ends. The company has not shown that kind of pricing power; it could not fully pass on tariffs in fiscal 2026. What could make this wrong: if U.S. solar demand after 2030 holds up without subsidies, for example because of fast-growing electricity demand, the long-term level in all three cases is too low. If the 45X credit is lost earlier because of foreign-entity rules or supplier problems, or tariffs keep rising, the bear case is closer. Customers can cancel or delay backlog orders.