Fluence Corporation Limited (ASX:FLC) Could Be Less Than A Year Away From Profitability

By
Simply Wall St
Published
May 09, 2021
ASX:FLC
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Fluence Corporation Limited's (ASX:FLC) future prospects. Fluence Corporation Limited provides water and wastewater treatment, and reuse solutions for the municipal, commercial, and industrial markets worldwide. On 31 December 2020, the AU$116m market-cap company posted a loss of US$4.6m for its most recent financial year. Many investors are wondering about the rate at which Fluence will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Fluence

According to some industry analysts covering Fluence, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$4.0m in 2021. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 41%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
ASX:FLC Earnings Per Share Growth May 10th 2021

Underlying developments driving Fluence's growth isn’t the focus of this broad overview, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Fluence currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Fluence's case is 71%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Fluence which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Fluence, take a look at Fluence's company page on Simply Wall St. We've also put together a list of important factors you should look at:

  1. Valuation: What is Fluence worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Fluence is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Fluence’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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