Tuesday, February 9, 2010

Transmission Builders and Suppliers (ABB; AMSC; BGC; PWR)

A handy table from Tom Konrad's AltEnergyStocks post "2010: The Year of the Strong Grid? Part II":

(...If Cash Flow from Operations (CFO) is positive, then T = (Total Liabilities (L) - Cash)/ CFO - the time it will take to pay off debt using internal cash flows and cash on hand. I consider anything less than a few years good....)

Company Current Ratio T P/E (trailing) Yield
ABB Group (ABB) 1.7 instantly 16.7 2.3%
American Superconductor (AMSC) 2.8 instantly N/A 0
Composite Technology Corp (CPTC.OB) 0.6 N/A N/A 0
CVTech Group (CVT.TO) 1.5x 7 years 24 0
General Cable (BGC) 2.1x instantly 12.3 0
Jinpan International (JST) 2.3x 6 months 10.6 0.6%
MasTec (MTZ) 1.7x 2 years 13.9 0
MYR Group (MYRG) 1.6x instantly 16.7 0
Pike Electric (PIKE) 2.3x 1 year 27 0
Quanta Services (PWR) 3.6x instantly 19 0
Resin Systems (RSSYF.PK)

I could not find current financial statements.

Siemens (SI) 1.2x 13 years 10 2.6%
Valmont Industries (VMI) 2.6x instantly 12.8 0.8%
Wesco International (WCC) 2.2x 2 years 9.2 0

...In general, the companies in this industry show a good deal of financial strength. The only ones in my list that I would eliminate from consideration on these measures are:

  • Composite Technology and Siemens, because of relatively weak current ratios. I also recently wrote about some other worries I have about Composite.
  • CVTech and Siemens because too much debt will constrain their flexibility.
  • ABB, MYR, Pike, and Quanta because they are too expensive from the standpoint of price to earnings.

The other financial strength measures are more important for negative earnings companies such as American Superconductor and Composite Technology. Since AMSC appears strong, other valuation measures should be considered to determine if it's overpriced before making a decision to purchase....MORE