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.

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The Street Still Doubts Gamesa Has A Business For The Long Term

Two Green Energy Companies Moving In Opposite Directions

Consider the curious cases of American Superconductor Corp (Nasdaq:AMSC) and Headwaters (NYSE:HW). Although not in competition with each other, the stocks of these two greener energy players have done an interesting dance over the past 14 years, as their fortunes and futures have shifted. Where American Superconductor was once the speculative pie-in-the-sky play, it now has a growing wind power business, while Headwaters continues to struggle with its transition into a manufacturer of green building products. 

The Quarters In Hand
This recently-completed quarter provides a good example of the different fortunes of these two companies. Headwaters reported only 4% revenue growth, as good growth in the now-small energy tech business could not substantially offset sluggish performance in the construction/building product segments. Adjusted EBITDA was up 11%, while reported earnings were hurt by impairments related to the company's coal cleaning operations. 


On the flip side, AMSC reported revenue growth of 36%, as the company's wind power business nearly reached $100 million in quarterly revenue. Gross margin improved almost 200 basis points, and the company reported a small increase in backlog. The company's order book now has about $956 million in revenue - more than two years at the current run-rate.

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http://stocks.investopedia.com/stock-analysis/2010/Two-Green-Energy-Companies-Moving-In-Different-Directions-HW-AMSC-GE-EXP-VMC-CX1104.aspx