US Legislation And Domestic Manufacturing Will Unlock Opportunities

Key Takeaways

• Favorable U.S. legislation and rapid data center growth position Fluence to gain market share, access premium pricing, and secure high-margin contracts.
  
• Improved margins, international expansion, and a diversified backlog support stable revenue growth and reduced risk from geographic concentration.
  
• Dependence on key suppliers, operational delays, regulatory risks, and global competition threaten revenue growth, margin stability, and long-term earnings visibility.

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.

• Recent U.S. legislation (OB3) has extended investment tax credits for stand-alone storage through 2034 and introduced domestic content and FEOC restrictions that favor suppliers with U.S.-based manufacturing and supply chains; as one of the few companies able to deliver domestic content-compliant battery storage at scale, Fluence is positioned to gain market share and secure premium pricing, supporting long-term revenue growth and higher margins.
  
• Global trends such as data center expansion and electrification-including surging AI-driven electricity demand-are expected to significantly boost the need for grid-scale storage solutions; Fluence's early engagement with major data center operators and readiness to address volatile and high-value loads provides access to a rapidly growing, high-margin market segment, positively impacting future revenues.
  
• Tariff and regulatory headwinds that previously delayed U.S. contracts are now easing, with all paused projects reactivated and new contract activity picking up; this pent-up demand, enabled by legislative clarity and domestic production ramps, is likely to convert to fiscal 2026 revenue, improving visibility and supporting top-line growth.
  
• Structural improvements in gross margins, driven by cost control, international project mix, ramping U.S. manufacturing, and supply chain optimization, have resulted in consistently higher margins than historical targets; as higher-margin domestic and SaaS/software business scales, this trend is expected to enhance future EBITDA and net earnings.
  
• A large and geographically diverse backlog, now at $4.9 billion and growing, provides high coverage for next year's guidance and underpins future revenue stability; continued international expansion (recent Australia wins, Asia Pacific and EMEA momentum) coupled with a recovering U.S. market reduces concentration risk and supports long-term revenue and earnings growth.

Fluence Energy Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Fluence Energy's revenue will grow by 19.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.8% today to 2.3% in 3 years time.
• Analysts expect earnings to reach $97.9 million (and earnings per share of $0.51) by about August 2028, up from $-18.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $128 million in earnings, and the most bearish expecting $-16.7 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.2x on those 2028 earnings, up from -55.6x today. This future PE is lower than the current PE for the US Electrical industry at 31.1x.
• Analysts expect the number of shares outstanding to grow by 1.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.44%, as per the Simply Wall St company report.

Fluence Energy Future Earnings Per Share Growth

Risks

• Persistent ramp-up and production delays at new U.S. manufacturing facilities risk revenue recognition timing and could negatively impact near-term and long-term revenue growth if further operational issues arise or if facility output fails to meet targets.
  
• Significant reliance on AESC as a primary cell supplier increases exposure to supply chain risk, FEOC compliance uncertainties, and delays in ramping additional domestic production lines; failure to secure or diversify domestic supply could erode backlog conversion and compress margins.
  
• Tariff fluctuations, ongoing trade disputes, and potential cost volatility tied to U.S.-China tensions continue to inject input cost uncertainty; inability to adequately pass through tariff-related cost increases or manage new regulatory requirements could reduce gross margins and net earnings.
  
• Intensifying global competition and continued declines in average selling prices (ASP) for energy storage solutions threaten long-term revenue growth and margin sustainability, particularly if new entrants or alternative energy storage technologies achieve cost or technical breakthroughs.
  
• While current revenue backlog is robust, book-to-bill momentum is partly reliant on favorable policy tailwinds; any rollback, delay, or political uncertainty related to tax credits, FEOC requirements, or renewable integration mandates may dampen future bookings, limit revenue visibility, and impact long-term earnings confidence.

Valuation

• The analysts have a consensus price target of $7.632 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 $12.0, 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 $4.2 billion, earnings will come to $97.9 million, and it would be trading on a PE ratio of 19.2x, assuming you use a discount rate of 9.4%.
• Given the current share price of $7.82, the analyst price target of $7.63 is 2.5% 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.