Critical Analysis: Nextracker (NASDAQ:NXT) vs. Sunrun (NASDAQ:RUN)

Sunrun (NASDAQ:RUN) and Nextracker (NASDAQ:NXT) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Volatility and Risk

Sunrun has a beta of 2.41, suggesting that its share price is 141% more volatile than the S&P 500. Comparatively, Nextracker has a beta of 2.27, suggesting that its share price is 127% more volatile than the S&P 500.

Profitability

This table compares Sunrun and Nextracker’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sunrun	-120.59%	14.19%	2.90%
Nextracker	17.55%	37.02%	18.44%

Institutional and Insider Ownership

91.7% of Sunrun shares are owned by institutional investors. Comparatively, 67.4% of Nextracker shares are owned by institutional investors. 3.4% of Sunrun shares are owned by company insiders. Comparatively, 0.6% of Nextracker shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Sunrun and Nextracker”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sunrun	$2.13 billion	2.09	-$2.85 billion	($11.61)	-1.66
Nextracker	$3.10 billion	3.73	$509.17 million	$3.67	21.35

Nextracker has higher revenue and earnings than Sunrun. Sunrun is trading at a lower price-to-earnings ratio than Nextracker, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sunrun and Nextracker, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sunrun	2	9	13	2	2.58
Nextracker	0	10	15	1	2.65

Sunrun presently has a consensus price target of $15.60, suggesting a potential downside of 18.97%. Nextracker has a consensus price target of $68.10, suggesting a potential downside of 13.07%. Given Nextracker’s stronger consensus rating and higher probable upside, analysts clearly believe Nextracker is more favorable than Sunrun.

Summary

Nextracker beats Sunrun on 11 of the 15 factors compared between the two stocks.

About Sunrun

Sunrun Inc. designs, develops, installs, sells, owns, and maintains residential solar energy systems in the United States. It also sells solar energy systems and products, such as panels and racking; and solar leads generated to customers. In addition, the company offers battery storage along with solar energy systems; and sells services to commercial developers through multi-family and new homes. Its primary customers are residential homeowners. The company markets and sells its products through direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing, and referral channels, as well as its partner network. Sunrun Inc. was founded in 2007 and is headquartered in San Francisco, California.

About Nextracker

Nextracker Inc., an energy solutions company, provides solar tracker and software solutions for utility-scale and distributed generation solar projects in the United States and internationally. The company offers tracking solutions, which includes NX Horizon, a solar tracking solution; and NX Horizon-XTR, a terrain-following tracker designed to expand the addressable market for trackers on sites with sloped, uneven, and challenging terrain. It also provides TrueCapture, a self-adjusting tracker control system, which boosts solar power plant production by optimizing the position of individual tracker row in response to site features, such as varying topography and changing weather conditions; and NX Navigator, that assists solar power plant owners and operators in monitoring, controlling, and protecting their solar projects. The company was founded in 2013 and is headquartered in Fremont, California. As of March 31, 2024 Nextracker Inc. was formerly a subsidiary of Flex Ltd.