Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 30 Jan, 25 | FLNC | Buy | USD 13.25 | USD 14.6 | USD 16.5 | 1 day | 24.5% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Fluence Energy, Inc., through its subsidiaries, offers energy storage products and solution, services, and artificial intelligence enabled software-as-a-service products for renewables and storage applications in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company sells energy storage products with integrated hardware, software, and digital intelligence. Its energy storage products include Gridstack Pro, a large-scale front-of-the-meter application; Gridstack, a front-of-the-meter application; Sunstack, a DC-coupled energy storage product for DC-coupled solar + storage projects; Edgestack, for smaller-scale commercial and industrial use cases; and Ultrastack, for critical system requirements of distribution and transmission networks. The company also provides engineering and delivery services to support the deployment of its storage products; operational and maintenance services; and digital applications. It serves independent power producers, developer, utilities, and other generators. Fluence Energy, Inc. was founded in 2018 and is headquartered in Arlington, Virginia. Fluence Energy, Inc. is a joint venture of Siemens Aktiengesellschaft and The AES Corporation.
Improved Profitability – Net income turned positive, reaching $30.4 million for the full year and $67.7 million for the fourth quarter, compared to a $104.8 million net loss in fiscal year 2023. Adjusted EBITDA also improved to $78.1 million from a negative $61.4 million, demonstrating better cost efficiency and operational performance.
Strong Revenue Growth – The company achieved record revenue of $2.7 billion in fiscal year 2024, reflecting a 22% increase from the prior year. Fourth-quarter revenue saw an even more significant 82% year-over-year growth, indicating strong demand and market expansion.
Rising Backlog and Potential Fulfillment Challenges – The order backlog increased significantly to $4.5 billion from $2.9 billion in the previous year. While this signals strong demand, it also raises concerns about the company’s ability to fulfill orders efficiently and avoid potential supply chain bottlenecks.
High Costs and Expenses – While revenue grew, costs also increased, with GAAP gross profit margins at 12.6% for the year. While this is an improvement, it remains relatively low compared to industry benchmarks, suggesting room for further efficiency improvements.
The company faces key investment risks, including potential supply chain constraints impacting its $4.5 billion backlog, rising infrastructure and operational costs affecting profit margins, regulatory uncertainties in key markets, and the challenge of sustaining high revenue growth amid increasing competition in the energy storage sector.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 13.25 | 9.94 | 14.6 | 16.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Record Financial Performance in Fiscal Year 2024: The company achieved record revenue of approximately $2.7 billion for fiscal year 2024, reflecting a 22% increase from the previous year. Fourth-quarter revenue reached $1.2 billion, marking an 82% year-over-year increase. This growth highlights the company’s strong market position and demand for its products and services.
Improved Profitability and Earnings Growth: The company demonstrated significant improvements in profitability, with GAAP gross profit margins rising to 12.6% for the fiscal year and 12.8% for the fourth quarter, compared to 6.4% and 11.3%, respectively, in 2023. Net income improved to $30.4 million for the full year and $67.7 million for Q4, a notable turnaround from the $104.8 million net loss in fiscal 2023. Additionally, adjusted EBITDA rose to $78.1 million for the year and $86.9 million for Q4, compared to negative $61.4 million and $19.8 million, respectively, in the prior year.
Robust Order Intake and Backlog Growth: The company reported a strong quarterly order intake of $1.2 billion, a significant increase from $737 million in the same quarter last year. The order backlog expanded to $4.5 billion as of September 30, 2024, compared to $2.9 billion a year earlier, reflecting continued demand and customer confidence in its energy storage solutions.
Strengthened Financial Position and Cash Flow: The company’s financial position improved with total cash reserves of $518.7 million as of September 30, 2024, representing a $56.0 million increase year-over-year. Net cash provided by operating activities was $79.7 million, compared to negative $111.9 million in fiscal 2023. Free cash flow also turned positive, reaching $71.6 million, a significant improvement from negative $114.9 million in the prior year.
Outlook for Fiscal Year 2025: For fiscal year 2025, the company expects revenue between $3.6 billion and $4.4 billion, with a midpoint of $4.0 billion, supported by a strong backlog covering approximately 65% of this guidance. Adjusted EBITDA is projected to range between $160 million and $200 million, with a midpoint of $180 million. Additionally, the company anticipates reaching an annual recurring revenue (ARR) of approximately $145 million by year-end. Management remains confident in sustaining profitable growth, driven by increasing global demand for battery energy storage solutions, particularly in the U.S. market.
Strategic Vision and Market Positioning: Company leadership expressed confidence in its growth trajectory, emphasizing its record-breaking financial performance and expanding order backlog. The President and CEO, Julian Nebreda, highlighted the company’s strong market presence and commitment to delivering value, citing the second consecutive quarter of securing over $1 billion in new orders. CFO Ahmed Pasha reinforced the company’s positive outlook, noting the firm’s transition to sustained profitability and strong free cash flow generation, positioning it for continued success in fiscal 2025.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Fluence Energy, Inc (NASDAQ: FLNC) at the closing price of USD 13.25, as on January 29, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Utilities Industry: Utilities - Renewable
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| FLNC Fluence Energy Inc |
-0.075 1.55% | 4.78 | - | 80.65 | 1.27 | 4.93 | 0.79 | -21.8195 |
| CEG Constellation Energy Corp |
3.92 1.94% | 205.55 | 26.42 | 27.55 | 3.13 | 6.31 | 3.58 | 13.47 |
| OEZVF VERBUND AG |
- -% | 76.73 | 10.61 | 13.37 | 2.57 | 3.03 | 2.51 | 6.50 |
| OEZVY Verbund AG ADR |
- -% | 14.66 | 10.72 | 13.53 | 2.57 | 3.06 | 2.51 | 6.50 |
| DNNGY Orsted A/S ADR |
-0.18 1.23% | 14.42 | - | 25.91 | 0.23 | 2.02 | 0.31 | -8.6553 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 29, 2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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