NASDAQ:NXT is not too expensive for the growth it is showing.

Last update: Jul 1, 2024

Discover NEXTRACKER INC-CL A (NASDAQ:NXT), an undervalued growth gem identified by our stock screener. NASDAQ:NXT is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Understanding NASDAQ:NXT's Growth Score

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:NXT, the assigned 8 reflects its growth potential:

NXT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 999.95%, which is quite impressive.
NXT shows a strong growth in Revenue. In the last year, the Revenue has grown by 31.42%.
Measured over the past years, NXT shows a very strong growth in Revenue. The Revenue has been growing by 30.49% on average per year.
The Earnings Per Share is expected to grow by 8.73% on average over the next years. This is quite good.
The Revenue is expected to grow by 10.61% on average over the next years. This is quite good.
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Deciphering NASDAQ:NXT's Valuation Rating

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:NXT, the assigned 6 reflects its valuation:

Based on the Price/Earnings ratio, NXT is valued cheaper than 81.40% of the companies in the same industry.
NXT is valuated rather cheaply when we compare the Price/Earnings ratio to 28.36, which is the current average of the S&P500 Index.
81.40% of the companies in the same industry are more expensive than NXT, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of NXT to the average of the S&P500 Index (20.16), we can say NXT is valued slightly cheaper.
83.72% of the companies in the same industry are more expensive than NXT, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, NXT is valued cheaply inside the industry as 82.56% of the companies are valued more expensively.
The excellent profitability rating of NXT may justify a higher PE ratio.

Health Assessment of NASDAQ:NXT

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:NXT, the assigned 7 reflects its health status:

An Altman-Z score of 3.10 indicates that NXT is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 3.10, NXT is doing good in the industry, outperforming 67.44% of the companies in the same industry.
The Debt to FCF ratio of NXT is 0.34, which is an excellent value as it means it would take NXT, only 0.34 years of fcf income to pay off all of its debts.
NXT has a Debt to FCF ratio of 0.34. This is amongst the best in the industry. NXT outperforms 95.35% of its industry peers.
A Debt/Equity ratio of 0.15 indicates that NXT is not too dependend on debt financing.
NXT has a better Quick ratio (1.76) than 62.79% of its industry peers.

How do we evaluate the Profitability for NASDAQ:NXT?

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:NXT was assigned a score of 9 for profitability:

NXT has a better Return On Assets (12.16%) than 95.35% of its industry peers.
Looking at the Return On Equity, with a value of 31.87%, NXT belongs to the top of the industry, outperforming 95.35% of the companies in the same industry.
With an excellent Return On Invested Capital value of 27.67%, NXT belongs to the best of the industry, outperforming 98.84% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for NXT is significantly above the industry average of 11.21%.
The last Return On Invested Capital (27.67%) for NXT is above the 3 year average (17.04%), which is a sign of increasing profitability.
NXT has a Profit Margin of 12.25%. This is amongst the best in the industry. NXT outperforms 88.37% of its industry peers.
In the last couple of years the Profit Margin of NXT has grown nicely.
NXT's Operating Margin of 23.49% is amongst the best of the industry. NXT outperforms 97.67% of its industry peers.
In the last couple of years the Operating Margin of NXT has grown nicely.
NXT's Gross Margin of 32.52% is fine compared to the rest of the industry. NXT outperforms 73.26% of its industry peers.
In the last couple of years the Gross Margin of NXT has grown nicely.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

Check the latest full fundamental report of NXT for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.