American Superconductor Takes Another Step Back From the Brink

American Superconductor's (NASDAQ: AMSC  ) slow and painful recovery from the Sinovel debacle took a small step forward yesterday. Management said its fiscal fourth quarter, which ended on March 31, was slightly better than expected and the stock is moving higher today.

Revenue is expected to be $19 million-$20 million, which is better than the $18 million minimum set earlier this year. That's up from $17.4 million in the fiscal third quarter, solid progress for the company.  

Maybe more important is that management expects to have cash between $49 million and $50 million at the end of the quarter, which is above a previous $48 million estimate. The real fear for investors is that the company will run out of cash because of mounting losses, so this is progress on that front.  

What is less encouraging is management's projection that it will be cash flow positive by the end of fiscal 2014, two years from now. Revenue of at least $180 million is needed to achieve that goal -- the company has a long way to go to get there.

What to watch for
American Superconductor separates its business into the wind and grid categories and I'll be watching closely how grid performed during the fourth quarter. This business grew 58% in the first three quarters; for the long term, I think it's a better business than wind, so we need to see more progress in the fourth quarter.

The challenge is that American Superconductor is going up against fierce competition that has a better balance sheet. Power-One (UNKNOWN: PWER.DL.DL  ) is one of the biggest players in the solar inverter market -- it's where AMSC would like to be -- and it has the product depth and the balance sheet to hold the company off. Right now, Power-One is definitely the better investment, but if American Superconductor can survive until it reaches positive cash flow then patient investors could be rewarded.

An energy stock to buy today
There are many different ways to play the energy sector, and The Motley Fool's analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations, and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "
The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2342255, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:44:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
AMSC $7.01 Up +0.05 +0.72%
American Supercond… CAPS Rating: *
PWER.DL.DL $0.00 Down +0.00 +0.00%
Power-One, Inc. CAPS Rating: ****