American Superconductor (AMSC)

High Quality
American Superconductor is a great business. It’s one of the fastest-growing companies we cover, and there’s a solid chance its momentum will continue. StockStory Analyst Team
Adam Hejl, Founder of StockStory
Max Juang, Equity Analyst

1. News

2. Summary

High Quality

Why We Like American Superconductor

Founded in 1987, American Superconductor (NASDAQ:AMSC) has shifted from superconductor research to developing power systems, adapting to changing energy grid needs and naval technology requirements.

  • Annual revenue growth of 28.4% over the past five years was outstanding, reflecting market share gains this cycle
  • Earnings per share have massively outperformed its peers over the last five years, increasing by 21.8% annually
  • Estimated revenue growth of 11.1% for the next 12 months implies its momentum over the last two years will continue
American Superconductor is a top-tier company. No coincidence the stock is up 288% over the last five years.
StockStory Analyst Team

Is Now The Time To Buy American Superconductor?

At $29.19 per share, American Superconductor trades at 55.4x forward P/E. There’s no arguing the market has lofty expectations given its premium multiple.

If you love the business, we suggest making it a small position as the long-term outlook is bright. Keep in mind that its premium valuation could result in rocky short-term stock performance.

3. American Superconductor (AMSC) Research Report: Q1 CY2025 Update

Power resiliency solutions provider American Superconductor (NASDAQ:AMSC) announced better-than-expected revenue in Q1 CY2025, with sales up 58.6% year on year to $66.66 million. On top of that, next quarter’s revenue guidance ($66 million at the midpoint) was surprisingly good and 8.8% above what analysts were expecting. Its non-GAAP profit of $0.12 per share was 24.1% above analysts’ consensus estimates.

American Superconductor (AMSC) Q1 CY2025 Highlights:

  • Revenue: $66.66 million vs analyst estimates of $60.27 million (58.6% year-on-year growth, 10.6% beat)
  • Adjusted EPS: $0.12 vs analyst estimates of $0.10 (24.1% beat)
  • Adjusted EBITDA: $6.09 million vs analyst estimates of $2.3 million (9.1% margin, significant beat)
  • Revenue Guidance for Q2 CY2025 is $66 million at the midpoint, above analyst estimates of $60.65 million
  • Adjusted EPS guidance for Q2 CY2025 is $0.10 at the midpoint, below analyst estimates of $0.11
  • Operating Margin: 2.5%, up from -0.8% in the same quarter last year
  • Free Cash Flow Margin: 7.9%, up from 4.6% in the same quarter last year
  • Market Capitalization: $973.9 million

Company Overview

Founded in 1987, American Superconductor (NASDAQ:AMSC) has shifted from superconductor research to developing power systems, adapting to changing energy grid needs and naval technology requirements.

Founded in 1987, AMSC has been developing and implementing advanced technologies that enhance the reliability, efficiency, and security of power systems. The company's core focus is on creating solutions of power on the grid while also protecting and expanding the capabilities of the U.S. Navy's fleet.

AMSC's business is built around two primary segments: Grid and Wind. The Grid segment offers solutions designed to improve the reliability, security, and capacity of electrical power infrastructure. These include D-VAR systems for voltage control, REG (Resilient Electric Grid) systems for urban power grids, and VVO (Volt VAR Optimization) systems for distribution networks. The company's solutions address challenges faced by power grid operators, such as integrating renewable energy sources, managing power quality, and enhancing grid resilience against natural disasters and cyber threats.

In the marine sector, AMSC provides advanced ship protection systems to the U.S. Navy. The company's degaussing systems, which reduce a naval ship's magnetic signature, offer advantages over traditional copper-based systems in terms of weight reduction and energy efficiency.

The Wind segment of AMSC focuses on providing electrical control systems and engineering services to wind turbine manufacturers. The company designs and licenses wind turbine systems, offering a comprehensive approach that includes turbine design, customer support, and the supply of critical components such as electrical control systems.

4. Renewable Energy

Renewable energy companies are buoyed by the secular trend of green energy that is upending traditional power generation. Those who innovate and evolve with this dynamic market can win share while those who continue to rely on legacy technologies can see diminishing demand, which includes headwinds from increasing regulation against “dirty” energy. Additionally, these companies are at the whim of economic cycles, as interest rates can impact the willingness to invest in renewable energy projects.

Competitors of American Superconductor Corporation (NASDAQ: AMSC) include ABB Ltd. (NYSE: ABB), Siemens AG (OTC: SIEGY), and General Electric Company (NYSE: GE).

5. Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, American Superconductor’s sales grew at an incredible 28.4% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

American Superconductor Quarterly Revenue

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. American Superconductor’s annualized revenue growth of 45% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. American Superconductor’s recent performance shows it’s one of the better Renewable Energy businesses as many of its peers faced declining sales because of cyclical headwinds. American Superconductor Year-On-Year Revenue Growth

This quarter, American Superconductor reported magnificent year-on-year revenue growth of 58.6%, and its $66.66 million of revenue beat Wall Street’s estimates by 10.6%. Company management is currently guiding for a 63.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 13.2% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and indicates the market sees success for its products and services.

6. Gross Margin & Pricing Power

All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.

American Superconductor has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 20.6% gross margin over the last five years. That means American Superconductor paid its suppliers a lot of money ($79.36 for every $100 in revenue) to run its business. American Superconductor Trailing 12-Month Gross Margin

In Q1, American Superconductor produced a 26.5% gross profit margin, up 1.7 percentage points year on year. American Superconductor’s full-year margin has also been trending up over the past 12 months, increasing by 3.8 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

7. Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Although American Superconductor was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 11.5% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, American Superconductor’s operating margin rose by 24.8 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to show consistent profitability.

American Superconductor Trailing 12-Month Operating Margin (GAAP)

In Q1, American Superconductor generated an operating profit margin of 2.5%, up 3.3 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

8. Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

American Superconductor’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

American Superconductor Trailing 12-Month EPS (Non-GAAP)

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For American Superconductor, its two-year annual EPS growth of 61.6% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, American Superconductor reported EPS at $0.12, up from $0.05 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects American Superconductor’s full-year EPS of $0.63 to shrink by 15.9%.

9. Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

While American Superconductor posted positive free cash flow this quarter, the broader story hasn’t been so clean. American Superconductor’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 4%, meaning it lit $4.03 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that American Superconductor’s margin expanded by 23.6 percentage points during that time. The company’s improvement and free cash flow generation this quarter show it’s heading in the right direction, and continued increases could help it achieve long-term cash profitability.

American Superconductor Trailing 12-Month Free Cash Flow Margin

American Superconductor’s free cash flow clocked in at $5.25 million in Q1, equivalent to a 7.9% margin. This result was good as its margin was 3.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.

10. Return on Invested Capital (ROIC)

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although American Superconductor has shown solid business quality lately, it struggled to grow profitably in the past. Its five-year average ROIC was negative 29.1%, meaning management lost money while trying to expand the business.

American Superconductor Trailing 12-Month Return On Invested Capital

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, American Superconductor’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

11. Balance Sheet Assessment

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

American Superconductor Net Cash Position

American Superconductor is a profitable, well-capitalized company with $79.49 million of cash and $3.37 million of debt on its balance sheet. This $76.13 million net cash position is 7.8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

12. Key Takeaways from American Superconductor’s Q1 Results

We were impressed by how significantly American Superconductor blew past analysts’ revenue and EBITDA expectations this quarter. We were also excited its revenue guidance for next quarter outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed. Zooming out, we think this was a solid print. The stock traded up 7.3% to $26 immediately after reporting.

13. Is Now The Time To Buy American Superconductor?

Updated: June 14, 2025 at 11:17 PM EDT

When considering an investment in American Superconductor, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

There are several reasons why we think American Superconductor is a great business. First of all, the company’s revenue growth was exceptional over the last five years. And while its relatively low ROIC suggests management has struggled to find compelling investment opportunities, its rising cash profitability gives it more optionality. On top of that, American Superconductor’s expanding operating margin shows the business has become more efficient.

American Superconductor’s P/E ratio based on the next 12 months is 55.4x. A lot of good news is certainly baked in given its premium multiple, but we’ll happily own American Superconductor as its fundamentals really stand out. Investments like this should be held patiently for at least three to five years as they benefit from the power of long-term compounding, which more than makes up for any short-term price volatility that comes with high valuations.

Wall Street analysts have a consensus one-year price target of $39 on the company (compared to the current share price of $29.19).