Fluence Energy (FLNC): Assessing Valuation After Major U.S. Battery Storage Supply Chain Milestone

If you have been wondering when U.S. clean energy would take supply chain control back from overseas, Fluence Energy (FLNC) just gave investors a big answer. The company has shipped its first domestic content lithium-ion battery storage systems built using U.S.-made components, a move that strengthens American energy security and unlocks meaningful incentives for customers. It is a development that should catch any investor’s eye, especially if you have been following efforts to reshore critical technology manufacturing.

This announcement follows a year when Fluence’s share price has tumbled even as it ramps up U.S. supply partnerships and grows revenue. Despite a solid 16% annual jump in sales and net income swinging up even faster, the stock is down nearly 68% for the year. It has only bounced higher by roughly 39% over the past 3 months. The overall momentum has shifted more positive in the short term, particularly as investors digest the impact of domestically produced systems and related policy incentives.

So after a turbulent year and this supply chain milestone, is Fluence’s current share price underestimating what lies ahead, or is the recent growth already factored in?

Most Popular Narrative: 61.9% Undervalued

The narrative suggests Fluence Energy is trading at a substantial discount to its fair value, signaling strong upside potential. According to NateF, the company presents a compelling case for investors in the renewable energy space.

Analysts project significant revenue growth for Fluence Energy, with sales expected to increase from $2.218 billion in fiscal year 2023 to approximately $5.205 billion by fiscal year 2026. This represents a compound annual growth rate (CAGR) of around 32%. Additionally, the company is anticipated to transition to profitability, with adjusted earnings per share (EPS) improving from a loss of $0.40 in FY2023 to a profit of $1.36 by FY2026.

Curious about what drives such a bold valuation call? The key elements in this narrative are dramatic revenue projections, a major pivot to profitability, and significant earnings growth assumptions that reset expectations for what this sector can deliver. Wondering just how aggressive these forecasts are? The full narrative explains every key financial driver fueling this outsized fair value calculation.

Result: Fair Value of $17.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, supply chain bottlenecks or sudden regulatory policy shifts could quickly challenge Fluence’s growth projections and its current undervalued narrative.

Find out about the key risks to this Fluence Energy narrative.

Another View: What Does Our DCF Model Say?

While the first approach points to significant upside for Fluence Energy, our SWS DCF model comes to a similar conclusion and indicates the stock is also undervalued. Could both perspectives be capturing the real story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fluence Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Fluence Energy Narrative

If you are interested in shaping your own perspective or want to dig into the numbers first-hand, you have the freedom to build your own view in just a few minutes. Do it your way

A great starting point for your Fluence Energy research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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