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AMSC Reports Record Earnings

|Includes: AMSC, A-Power Energy Generation Systems Ltd. (APWR), KDN, WGOV, ZOLT

(NASDAQ:AMSC) just reported record earnings and record numbers but the reality is about what I have been reporting for how long???  The valuation of AMSC was over 40 P/E and unfortunately, Price to Earnings ratio out trumps hope an pumping of stock prices.  I like the AMSC growth story going forward and I am betting the transmission side of AMSC has not been priced into the forward guidance but the reality is AMSC relies on 70% of its revenues from one customer Sinovel in China and the p/e of 40 is just too rich for a wind components company.

My pick (NASDAQ:APWR) has a forward P/E of 10.........when one compares the growth stories going forward, somewhere in the middle is reality for a future P/E of a wind components company.   The only difference is (AMSC) is pretty much a pure play on China Wind Energy where as APWR is a diversified green energy DPG player in other parts of green energy besides wind which is slow to get going for APWR.

all in all, AMSC is a great growth story going forward but I maintain the rich p/e of 40 is just too rich for what AMSC does.   And, the growth story of 2010 is going to be APWR moving forward from the $12 handle to over $25 by year end 2010.


“We expect to end our fiscal year with continued top-line growth and strong profits,” said David Henry, AMSC’s senior vice president and chief financial officer. “As a result of our third quarter results, we are increasing our full-year guidance for both revenues and net income. For the full year fiscal 2009, we now expect revenues will be in a range of $312 million to $315 million, up from our previous forecasted range of $300 million to $310 million. We are increasing our gross margin forecast to approximately 36 percent from a range of 34 percent to 35 percent. Our GAAP net income forecast for fiscal 2009 also has been increased from a range of $11.0 million to $13.0 million, or $0.24 to $0.29 per diluted share, to a range of $14.0 million to $15.0 million, or $0.31 to $0.33 per diluted share. AMSC’s non-GAAP net income forecast has increased from a range of $27.0 million to $29.0 million, or $0.59 to $0.64 per diluted share, to a range of $29.5 million to $30.5 million, or $0.65 to $0.67 per diluted share. Finally, we continue to expect that AMSC will be net cash flow positive for fiscal year 2009.”

“As we detailed at our Analysts’ Day in November 2009, we expect AMSC’s growth to continue in fiscal 2010,” Henry continued. “We expect our revenue to exceed $400 million and our non-GAAP net income to exceed $54 million, or $1.15 per diluted share for full year fiscal 2010.”

Author is LONG APWR

Disclosure: Author is LONG APWR