American Superconductor Takes Another Step Back From the Brink

American Superconductor's 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 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.

The article American Superconductor Takes Another Step Back From the Brink originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Introduction to ETFs

The basics of Exchange Traded Funds and why ETFs are hot.

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Add a Comment

*0 / 3000 Character Maximum