Why American Superconductor Stock Just Crashed

Core Viewpoint - American Superconductor (NASDAQ: AMSC) experienced a significant stock decline of 31.5% following the release of mixed earnings results, with earnings beating expectations but sales missing forecasts [1][7]. Earnings Performance - Analysts had predicted AMSC would earn $0.15 per share on sales of $67.2 million, but the company reported a profit of $0.20 per share, exceeding earnings expectations, while sales were only $65.9 million [2][4]. - Year-over-year sales growth was nearly 21%, but the reported profit of $0.20 was a non-GAAP figure; under GAAP, the profit was only $0.11 per share, a decline of 15% from the previous year's $0.13 [4]. Future Outlook - CEO Daniel P. McGahn indicated strong order demand in energy and military markets, predicting Q3 sales to be between $65 million and $70 million, although GAAP earnings are expected to drop to about $0.05 per share [5]. Valuation Concerns - Despite the sales growth, the stock is considered overvalued, trading at over $1.8 billion with a trailing earnings multiple of nearly 120 times and a price-to-free cash flow ratio of about 95 times, raising concerns about the sustainability of its valuation given declining profits [6].