The hemorrhaging has been mostly stanched for Fuel System Solutions (NASDAQ: FSYS), the alternative fuel components maker that bled out last week after reporting earnings last week that matched Wall Street estimates on the top and bottom line but narrowing guidance for the coming quarter to the lower end of its prior forecast. 

With its shares tumbling 18% on the day of the release and ultimately closing out the week 21% lower, I think this is what's called in polite circles as an "overreaction."

Filling station compressor. Source: Fuel Systems Solutions.

The components maker reported a nice 10% rise in its automotive revenues division to $67.5 million and a 6% increase in industrial revenues to $30.1 million, but what worried everyone was Fuel Systems' expectation that with expiration of certain OEM and delayed-OEM (DOEM) later this year and early into next year, and vehicle maker's not renewing them because of the economic situation, the growth it achieved this past quarter in particular won't be repeated going forward.

Under Fuel System's DOEM model, it receives vehicles directly from automotive OEMs, installs its proprietary propane or natural gas fuel systems into the vehicles, then delivers the completed bi-fuel vehicles directly to the dealership network. It is the main driver of revenue growth.

This past quarter, DOEM revenues jumped $8.4 million while compressor sales added another $1.6 million, gains that were offset by a $2.1 million drop in OEM kits, mainly in Italy, and U.S. aftermarket sales of some $1.4 million. While there will be some new DOEM programs that bear fruit, it won't be enough to offset those that are going away. That was baked into management's guidance, but it gave Wall Street the heebie-jeebies that the bulk of its business might evaporate into the ether.

That's why Westport Innovations (WPRT -2.02%), which generates two-thirds less in sales than does Fuel Systems, and Clean Energy Fuels (CLNE -1.67%), which generates 10% less -- but both of which have generated more extensive losses than Fuel Systems -- have market caps far in excess of their rival. Fuel Systems has been priced at just $270 million whereas Westport and Clean Energy exceed $1 billion each.

Of course, Westport went through a bit of a leeching process itself when its joint venture partner Cummins (CMI -0.01%)announced it was striking out on its own in the production of natural gas engines, adding another rival that's healthy and well financed to an industry where doubts swirl about viability.

Which all goes to say why Fuel Systems Solutions could represent an opportunity here, beyond just the massive sell-off in its stock. Sometimes, there's good reason to flee a company, and though its guidance suggests its results won't be particularly robust for the immediate future, it's still a financially sound company. Its relatively small amount of debt is related to financing its foreign subsidiary operations while it carries more than $74 million in cash and equivalents on its balance sheet.

As a result, although there's no reason to jump right into Fuel Systems' stock, you don't need to call the undertaker, either. The market's leechcraft has created a situation where patient investors have a new floor from which to base their buy-in decisions.

I expect we'll eventually see the alternative fuels components maker rebound, but I also anticipate we've got time before we need to worry about missing the next leg higher.