A-Power (Nasdaq:APWR) Beats Our Estimates - Stock Up More than 30%
Apr 09, 2009
Author: SCP Editor
April 9, 2009 – A-Power (Nasdaq:APWR) reported Q4 and FY08 financial results this morning, and the stock is up about 30% on the news to $5.80. We still think the stock is cheap at this level, given the company’s prospects in both Asia’s burgeoning wind energy markets and in its distributed power gen business.
Financial Highlights
· Q4 revenues up 93.5% on a Y/Y basis to $81.4 million, with gross margin of 17.8%, vs. 11.2% in the same period last year, with a 197.8% increase in net income to $10 million. EPS on a diluted basis was $0.30 as compared with $0.25 for the same period last year (Q4 fully diluted shares were 33.1 million, vs. 13.7 million in Q407). For the year, revenues increased 73.6% to $264.9 million, with gross margin of 13.9%. Net income increased by 87.4% to $28.5 million, while diluted EPS came in at $1.01 vs. $2.23 (FY08 fully diluted shares were 28.2 million vs. 6.8 million in FY07). The company’s cash position at December 31, 2008 was $43.5 million, or about $1.31 per share.
When we last wrote about A-Power on January 23, we said that at $5, the stock was one of the most overlooked and undervalued stocks in the market. We stand by that assessment this morning. The reported revenues of $264.9 million exceeded our estimates of $259.4 million, and its $28.5 million in net income exceeded our estimates of $23.4 million.
Management has guided revenues for 2009 to come in at about $290 million and net income to come in at $29 million – based on existing distributed power gen backlogs. It apparently isn’t factoring in new contracts and recognized revenues from wind turbine sales for the year, so there appears to be some distinct upside to the guidance. Clearly, management is taking a conservative and measured approach.
We are raising our target trading range for the stock from the $8 to $11.50 range to a $9.70 to $12.50 based on an assumed 1.5x FY09 guidance on revenues and 15x FY09 guidance on income. I
mportant Disclosure: SCPEditor is LONG APWR. The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance.
