Megawatt-scale power resiliency solutions provider American Superconductor Co. (NASDAQ: AMSC) shares surged 40% on its Q3 2023 earnings report and upside guidance. The computer and technology sector company offers products and services to keep electricity flowing smoothly on the power grid, storage and through sustainable energy systems like wind turbines. The company's proprietary high-temperature superconductor (HTS) wire products are used throughout industries including healthcare, mining, military, semiconductor, industrial processing and power transmission.
Its ship protection systems enable naval and commercial ships to reduce their magnetic signature, helping protect them from magnetic mines, as well as power generation and propulsion systems. The company has been in a turnaround, improving both top and bottom-line results as evidenced by its latest earnings report and guidance. The company competes with various companies like Siemens Energy AG (OTCMKTS: SMEGF) and Power Integrations Inc. (NASDAQ: POWI).
Diversified industries
The company has two divisions, Grid and Wind. The Grid division makes power systems and electronic converters that optimize and control the flow of electricity through power grids and renewable energy systems. Utilities are key customers that depend on its products to enhance the reliability and stability of electric grids. The U.S. Navy's fleet protection and power systems are under the Grid division. The Wind division designs wind turbine systems and provides components and control systems. They're focused on boosting the performance and efficiency of wind turbines and helping to reduce production costs.
Wind turbine order
On January 16, 2024, American Superconductor announced an $8 million follow-on order from Inox Wind Ltd, a premiere India-based wind turbine manufacturer. The order is for the 3 MW class wind turbine electrical control systems (ECS). American Superconductor expects to ship the systems out throughout 2024 and is contracted as the exclusive supplier of ECS for Inox's 3 MW class wind turbine. According to the National Electricity Plan for 2022 to 2032, India's onshore wind market capacity is expected to add more than 80 GW by 2032 to reach its installed capacity goal of 122 GW.
Steady earnings beats
On January 24, 2024, American Superconductor announced its Q3 2023 EPS of 3 cents, beating analyst estimates by 9 cents. Revenues jumped 64.8% YoY to $39.4 million versus $34 million consensus analyst estimates. Increased shipments of electronic control and new energy power systems drove the revenue surge. They achieved 25% gross margins and non-GAAP net income for the second consecutive quarter. The company closed the quarter with $25 million in cash and cash equivalents.
American Superconductor CEO Daniel McGahn commented, "We booked over $34 million of new orders during the quarter, including our second 3MW ECS order from Inox Wind. We ended the quarter with over $137 million in a 12-month backlog, nearly 25% year-over-year growth. Given this backlog position, strong demand in our end markets, and shortening customer lead times, we believe we are very well positioned for the fourth fiscal quarter which will end March 2024."
Upside guidance
American Superconductor raised forecasts for its fourth-quarter 2023 revenues of $36 million to $40 million versus $34.4 million consensus analyst estimates. The GAAP net loss is not expected to exceed $3.5 million or 12 cents a share. Non-GAAP net loss is not expected to exceed $1.7 million or 6 cents per share compared to consensus analyst estimates for a loss of 4 cents, assuming no change in fair value of contingent consideration. Operating cash flow is expected to break even to positive cash generation of $2 million. American Superconductor expects cash and cash equivalents to be at least $25 million.
American Superconductor analyst ratings and price targets are at MarketBeat. American Superconductor peers and competitor stocks can be found with the MarketBeat stock screener. AMSC shares have a 4.86% short interest.
Daily bull flag breakout
The daily candlestick chart on AMSC indicates a bull flag breakout pattern. The flagpole formed on the rally from the $5.78 low on October 23, 2023, to the $11.81 peak on December 28, 2023. The flag formed as AMSC pulled back in a parallel price panel comprised of lower highs and higher lows that tested the daily 50-period moving average (MA). The daily market structure low (MSL) triggered the breakout through $10.19, powered by the sharp rise in the daily relative strength index (RSI) oscillator through the 70-band. This triggered the bull flat breakout as shares surged to $14.70 on January 26, 2024. Pullback support levels are at $11.00, $10.19, $9.37 and $8.56.
