Wednesday, September 11, 2013

Seeking Alpha: The Street Still Doubts Gamesa Has A Business For The Long Term

Retail investors always react angrily whenever you mention it, but even the hottest markets always come back to real-world concerns like economic value added, margins, and cash flows. Nobody wanted to hear about the per-kWH costs of wind power or the importance of government subsidies back in the glory days of the renewable/alt energy bubble, but the chickens ultimately came home to roost (as they always do), and they left a big mess on former high-fliers like Vestas (VWDRY.PK) and Gamesa (GCTAY.PK) (GAM.MC).

Extreme industry over-capacity and order declines tied to lower government subsidy payments have forced turbine manufacturers to restructure their operations and rein in their ambitions. To that end, I think Gamesa has made a lot of progress, progress that shows in the 220% jump in the share price over the last year and the more than 450% appreciation from the worst of the lows. While Gamesa still has to deal with well-heeled rivals like General Electric (GE) and Siemens (SI) and a host of low-cost Chinese rivals, I think Gamesa's stable turbine market share is an underrated positive in this story, and it looks like the market still doesn't quite believe that this is a viable story for the long-haul.

Read the full Seeking Alpha article here:
The Street Still Doubts Gamesa Has A Business For The Long Term

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