American Superconductor (NASDAQ:AMSC) Beats Expectations in Strong Q1, Stock Soars

Power resiliency solutions provider American Superconductor (NASDAQ:AMSC) reported revenue ahead of Wall Street’s expectations 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.

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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.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. 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.

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.

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 healthy and suggests the market is baking in success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

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.

This quarter, 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.

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.

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%.

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.

Sure, American Superconductor had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.