Breakeven Is Near for Fluence Corporation Limited (ASX:FLC)
We feel now is a pretty good time to analyse Fluence Corporation Limited's (ASX:FLC) business as it appears the company may be on the cusp of a considerable accomplishment. Fluence Corporation Limited, together with its subsidiaries, provides water and wastewater treatment solutions for the municipal, commercial, and industrial markets worldwide. On 31 December 2023, the AU$183m market-cap company posted a loss of US$15m 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Fluence
Fluence is bordering on breakeven, according to some Australian Machinery analysts. They expect the company to post a final loss in 2023, before turning a profit of US$100k in 2024. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Fluence's upcoming projects, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Fluence currently has a debt-to-equity ratio of 146%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which 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 compiled a list of pertinent factors you should look at:
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.
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.
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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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.