Is This Company Back From the Dead?
American Superconductor (NAS: AMSC) has finally reported fiscal 2010 and first quarter 2011 earnings after months of waiting. Sinovel started the madness when it rejected shipments and payment in April, and investors have been in limbo ever since. Now we're at least starting to hear some news from the company.
For fiscal 2010, revenue was down 31.8% to $59.8 million, and net loss reached $185.1 million. But the numbers look even worse for the first quarter. Total revenue was down 90.7% to $9.1 million as the company's wind division took a massive drop in sales.
But here's where it gets interesting. American Superconductor has a market cap of $236 million right now, $156.8 million in cash and marketable securities, and no debt. So while operations are currently losing money, the market is pricing the stock as if the company itself is worth almost nothing. Maybe the market is right, but I see some interesting prospects on the horizon.
After earnings were released, the company also released some details about $100 million in new contracts in both the wind and grid businesses. Manufacturers in China, India, and South Korea signed deals with American Superconductor's wind division for turbine designs and equipment.
The grid business is also building some traction with a D-VAR deal in the U.S., equipment contracts in Europe, and the company's first Amperium wire shipment to South Korea. The company's grid solutions are attempting to make inroads against competitors like Power-One (NAS: PWER) and Satcon Technology (NAS: SATC) in the growing but competitive inverter business.
Beginning a new chapter or beginning of the end?
The question now is whether American Superconductor can turn around operations to become profitable or if it will face a slow death? I tend to lean toward the former because of the company's ability to innovate new products in a growing cleantech space. But that hasn't worked out well for my investment so far.
A cool $100 million in new orders is a plus, and I think the company's cash position provides some value, but we need much more improvement in coming quarters. One thing that could really send shares higher is a big settlement from Sinovel, which American Superconductor is suing in China. But I'm not holding my breath for a positive ruling there.
I'll hold on to my options right now, but I'm hesitant to add to that position. What do you think about American Superconductor's shares right now? Sound off in the comments section below.
At the time this article was published Fool contributor Travis Hoium owns call options on American Superconductor. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of Power-One. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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