American Superconductor (AMSC +6.40%) stock tumbled an unlucky 7% through 11:05 a.m. ET Wednesday, despite "beating earnings" last night.
Heading into its fiscal Q1 2024, analysts forecast the green energy stock (which builds control systems for wind turbines and optimizes power lines for transmitting wind and solar power) would earn only $0.01 per share on sales of $39.3 million. In fact, American Superconductor earned $0.09 per share, and sales were $40.3 million.
NASDAQ: AMSC
Key Data Points
American Superconductor Q1 earnings
That's the good news. The bad news is that the "$0.09" that American Superconductor supposedly earned was only a non-GAAP number. When earnings are calculated according to generally accepted accounting principles (GAAP), it actually lost $0.07 per share -- and that discovery may have discouraged investors today.
But don't lose heart. Even a $0.07 loss was better than the $0.19 per share it lost a year ago. And revenues soared 33% year over year, which was much more obviously good news. Last but not least, American Superconductor flipped the switch on free cash flow, which went from negative $2 million in Q1 2023 to positive $3.1 million in Q1 2024.
Is American Superconductor stock a sell?
So why are investors selling the stock today? That's really not clear.
Aside from the facts that American Superconductor lost money in Q1 (it lost a lot more money a year ago, remember) and that it forecast another ($0.05-per-share) GAAP loss in Q2, things actually seem to be progressing nicely. Sales guidance for Q2, for example, is about $40 million -- ahead of expectations -- and management thinks free cash flow will remain positive as well.
Sure, it's still hard to value the stock with so many numbers flipping from negative to positive. Valued on earnings...well, American Superconductor has no earnings. Valued on free cash flow, it has a price-to-free-cash-flow ratio of 103 -- not cheap. But sales growth is steady, and profits are improving.
At the right price, I'd almost be tempted to call this stock a buy.
