Global Electrification Will Ignite Demand For Battery Storage

Key Takeaways

• Accelerating global demand for grid-scale storage, policy incentives, and renewable integration position Fluence favorably for revenue growth and market share gains.
  
• Strengthened domestic supply chains and next-generation products improve resilience, margins, and support order recovery amid easing market uncertainties.
  
• Trade policy uncertainty, supply chain dependencies, rising competition, and policy shifts create significant risks to Fluence’s revenue, profitability, and backlog conversion timelines.

Catalysts

Through its subsidiaries, provides energy storage and optimization software for renewables and storage applications in the Americas, the Asia Pacific, Europe, the Middle East, and Africa.

• Rapid global electrification and surging power demand—driven by data centers, transportation, and industrial sectors—are expected to sharply increase the need for grid resilience and flexibility, leading to substantial projected growth for large-scale battery storage. This expansion will drive material revenue growth for Fluence over the next several years.
  
• Significant declines in battery costs (down ~70% since 2022) and continued cost reductions for renewable energy are accelerating renewable integration globally, boosting demand for storage solutions to manage grid intermittency—segments where Fluence’s products like Smartstack are well-positioned to capture market share, supporting both top-line growth and consistent gross margins.
  
• Global policy momentum for decarbonization, local manufacturing incentives (e.g., US IRA content bonuses), and a multi-year surge in grid modernization investments are expanding addressable markets and providing a tailwind for project awards and recurring software/services revenues, enhancing both revenue visibility and long-term earnings quality.
  
• Fluence's successful ramp of its US domestic battery supply chain (now able to blend and offer up to 100% domestically produced batteries) increases resilience against trade uncertainty, enables customers to claim subsidy incentives, and provides a sustainable cost advantage—key factors supporting future revenue recovery as present contract pauses due to tariffs are resolved.
  
• The growing backlog exceeding $4.9 billion, expanding international pipeline, and initial traction for next-generation products (e.g., Smartstack) set the stage for an eventual rebound in order volumes, margin expansion from operational efficiencies, and a path back to positive free cash flow as uncertainty recedes and the storage market resumes robust growth.

Fluence Energy Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Fluence Energy's revenue will grow by 22.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from -1.0% today to 2.4% in 3 years time.
• Analysts expect earnings to reach $102.0 million (and earnings per share of $0.55) by about July 2028, up from $-23.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $133.2 million in earnings, and the most bearish expecting $13.1 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.3x on those 2028 earnings, up from -45.5x today. This future PE is lower than the current PE for the US Electrical industry at 27.3x.
• Analysts expect the number of shares outstanding to grow by 1.34% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.79%, as per the Simply Wall St company report.

Fluence Energy Future Earnings Per Share Growth

Risks

• Persistent tariff and trade policy uncertainty—especially the sharp rise in U.S. tariffs on Chinese battery imports to 155%—has resulted in paused contract execution and a $700 million reduction in near-term revenue guidance, introducing risk to the timing and realization of future revenue and compressing EBITDA.
  
• Ongoing industry reliance on Chinese cell production, with limited supply alternatives in Korea or Japan, exposes Fluence to future supply chain disruptions or unfavorable price shifts, which could negatively impact cost of goods sold and net margins if domestic capacity isn’t ramped quickly enough.
  
• Elevated competitive intensity, particularly from international peers and Chinese firms in global markets, could drive pricing pressure or margin erosion, especially as most battery technologies commoditize and competitors attempt to replicate Fluence's product offerings.
  
• Shifts in U.S. industrial policy—including potential implementation of FEOC (Foreign Entity of Concern) restrictions and reductions in government incentives—could threaten the cost competitiveness of Fluence’s domestic supply chain strategy, impacting both order volume and profitability in its largest market.
  
• Repeated pauses or delays in large project contracts due to macroeconomic, policy, or supply chain uncertainties (including customer preferences to delay commitments until tariff stability returns) could result in longer sales cycles, deferred backlog conversion, and greater earnings volatility.

Valuation

• The analysts have a consensus price target of $8.068 for Fluence Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $2.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.3 billion, earnings will come to $102.0 million, and it would be trading on a PE ratio of 19.3x, assuming you use a discount rate of 8.8%.
• Given the current share price of $8.32, the analyst price target of $8.07 is 3.1% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.