American Superconductor Discounting Contract Wins (AMSC)

American Superconductor Corporation (NASDAQ: AMSC) is one of the (almost) cult stocks out there in the field of alternative energy and green energy as its has proprietary megawatt-scale wind turbine designs and electrical control systems.  The company has announced two orders this week, yet shares are ignoring the news.  It seems that the valuation and performance is going to demand from the company.

The company announced yesterday that it has received a follow-on order for $10 million worth of wind turbine core electrical components.  This was from China’s CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd. and will be used in the 1.65 megawatt wind turbines designed by American Superconductor’s Windtec subsidiary.

Then this morning came the announcement that American Superconductor received a follow-on order for 30 sets of electrical control systems.  This order was from Hyundai Heavy Industries Co. for its 1.65 megawatt wind turbines now in production in South Korea. AMSC has already received an electrical control systems order for HHI’s 2 MW wind turbine prototypes and all of the systems will be shipped by the end of May 2010.

Neither order announcement has generated much buzz in the stock.  Yesterday shares were down about 1% at $31.78 on only about 579,000 shares after the first announcement was defined and shares are down 0.25% at $31.70 on under 100,000 as of 10:10 AM EST this morning.

What is interesting is that American Superconductor is still under the $100 million per quarter in revenues business stage.  That means that any and all new or follow-on orders can influence the quarter.  You may never know if there was hope for more or if this is a bump above, but estimates for the current December-end quarter are $77.27 million according to Thomson Reuters.  The total 2009 revenue targets are $307.76 million, and the 2010 revenue targets are $406.8 million in revenues per Thomson Reuters data.

The $31.70 price today compares to a 52-week trading range of $8.22 to $37.58.  The problem despite a solid position is that the valuations (and share recovery) may be priced for perfection.  Thomson Reuters has consensus estimates pegged at $0.62 EPS for 2009 and $1.04 EPS for 2010.  That gives implied forward P/E ratios of 51-times expected 2009 earnings and 30.5-times expected 2010 earnings.

American Superconductor is a solid company and fits right in with the move to a greener world in the current financial-political landscape.  It is just far from undiscovered and it is going to take either much larger orders or many more individual orders to move the meter in the share price.

JON C. OGG
November 18, 2009