Is Now the Right Time to Reassess Eos Energy After Recent 400% Rally?

Trying to decide what to do with Eos Energy Enterprises? You are definitely not alone. Investors have taken notice in a big way, as the stock has soared nearly 20% in just the past week, and a staggering 116% over the last month. Year to date, shares have more than doubled, and if you zoom out even further, the 399% one-year return is enough to make anyone sit up and take a closer look. Over a three-year span, Eos has delivered a remarkable 958% return, though the five-year gain is a more subdued 48%, pointing to both upside and historical swings.

What is driving all this excitement? Beyond the company’s position in the energy storage space, investors are reacting to broader momentum in clean technology stocks and a combination of legislative moves around energy policy. While some of the rise can be traced to marketwide optimism about the sector, portions also reflect a shift in risk perception as investors are betting that Eos could carve out a meaningful role in the energy transition.

But even the most impressive price chart begs a deeper question: is Eos actually undervalued or has the stock simply run too far, too fast? On a value score basis, Eos clocks in at 2 out of 6, passing two out of six common undervaluation checks. That puts it on the scorecard, but suggests there is a complex picture behind the recent gains.

In the next section, we will unpack each of the valuation checks and see where Eos stands before wrapping up with an even more insightful approach to thinking about what the stock is really worth.

Eos Energy Enterprises scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Eos Energy Enterprises Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a business by projecting its future cash flows and discounting them back to their present value. This helps investors determine what the company could be worth today, based on anticipated performance.

For Eos Energy Enterprises, the DCF analysis uses the 2 Stage Free Cash Flow to Equity model. According to the latest data, Eos reported a last twelve months Free Cash Flow of -$224 million. While the present figure is negative, forecasts expect a substantial turnaround. Analyst estimates show Free Cash Flow moving to -$108 million by 2026 and swinging positive, reaching $380 million by 2029. Simply Wall St further extrapolates annual growth beyond the initial analyst projections, expecting Free Cash Flow to rise above $725 million by 2035.

Based on these assumptions, the model calculates an intrinsic value of $26.24 per share. With this estimate being about 43.5% higher than the current share price, the implication is that Eos Energy Enterprises stock is significantly undervalued according to the DCF approach.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Eos Energy Enterprises.

Our Discounted Cash Flow (DCF) analysis suggests Eos Energy Enterprises is undervalued by 43.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Eos Energy Enterprises Price vs Book

For businesses like Eos Energy Enterprises, the Price-to-Book (P/B) ratio is a commonly used valuation metric. It is especially relevant for companies where book value meaningfully reflects underlying assets and where earnings might still be negative due to ongoing investments or early-stage growth. Growth potential, risk factors, and profitability all play large roles in what constitutes a "normal" or "fair" P/B ratio for a company in this sector. Rapidly growing or less risky companies typically command higher P/B ratios, while slower-growing or riskier firms trade at lower multiples.

Currently, Eos Energy Enterprises trades at a P/B ratio of -3.75x. To put this in perspective, the industry average is 2.57x and the peer group sits at around 2.96x. A negative P/B can suggest either concerns about asset values or, more often, significant accumulated losses or a negative book value, which is not uncommon among high-growth, early-stage innovators.

To get a more nuanced view, Simply Wall St's proprietary "Fair Ratio" metric estimates what an appropriate P/B ratio should be for Eos. This metric factors in unique attributes like projected growth, risk, profit margins, industry conditions, and company size. The Fair Ratio moves beyond basic peer or industry comparisons by truly tailoring expectations to the specific opportunities and challenges faced by Eos Energy Enterprises.

Given the negative P/B ratio, a direct comparison to a positive Fair Ratio tool is not possible. This signals caution, as it suggests the company’s current assets do not outweigh its liabilities on paper. Until Eos transitions to a positive book value, the P/B multiple will remain a challenging tool for determining if the stock is fairly valued or not.

Result: OVERVALUED

PB ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Eos Energy Enterprises Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let's introduce you to Narratives, a simple but powerful approach where you connect your view of a company's story and prospects to a concrete set of numbers, such as your assumptions for future revenue growth, profit margins, and a fair value estimate for the stock.

Narratives link the company's business story, such as technology breakthroughs, supportive legislation, or industry challenges, to a customized financial forecast. This forecast is then used to estimate what you believe is a fair price for the shares. This approach helps you make informed buy or sell decisions by comparing your Narrative-based Fair Value to the current market price, giving you a clear sense of whether the stock fits your investment outlook.

Best of all, Narratives are easy to set up and update on Simply Wall St's Community page, where millions of investors regularly share, debate, and refine their assumptions as new data and news emerge. Each time events change, such as earnings announcements or industry shifts, your Narrative gets updated in real time, keeping your investment view current and agile.

For example, one Eos Energy Enterprises Narrative could project rapid adoption and margin improvement, supporting a bullish price target of $9.00. Another Narrative might highlight cash flow concerns and settle on a more cautious $5.00 fair value, reminding us that every investment story ultimately reflects its author's beliefs and evidence.

Do you think there's more to the story for Eos Energy Enterprises? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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