Power resiliency solutions provider American Superconductor (NASDAQ: AMSC) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 79.6% year on year to $72.36 million. On top of that, next quarter’s revenue guidance ($67.5 million at the midpoint) was surprisingly good and 6% above what analysts were expecting. Its non-GAAP profit of $0.14 per share was 16.7% above analysts’ consensus estimates.

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"We’ve kicked off fiscal 2025 with accelerated growth, delivering a standout first quarter marked by significant progress and exceptional execution that surpassed our expectations," said Daniel P. McGahn, Chairman, President and CEO, AMSC.

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.

Revenue 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 many enduring ones grow for years. Thankfully, American Superconductor’s 29% annualized revenue growth over the last five years was incredible. 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 49.8% 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 79.6%, and its $72.36 million of revenue beat Wall Street’s estimates by 11.4%. Company management is currently guiding for a 23.9% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.1% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Operating Margin

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 9.4% 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 29.9 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.

In Q2, American Superconductor generated an operating margin profit margin of 7.8%, up 6.2 percentage points year on year. The increase was solid, 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

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

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 67.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q2, American Superconductor reported adjusted EPS at $0.14, up from $0.08 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 $0.69 to shrink by 17.4%.

Key Takeaways from American Superconductor’s Q2 Results

We were impressed by American Superconductor’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 4.6% to $45.96 immediately following the results.

American Superconductor put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.