Fluence Corporation Limited (ASX:FLC) Is About To Turn The Corner

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 provides water and wastewater treatment, and reuse solutions for the municipal, commercial, and industrial markets worldwide. The AU$137m market-cap company announced a latest loss of US$4.6m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Fluence's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Fluence

According to some industry analysts covering Fluence, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$4.0m in 2021. So, the company is predicted to breakeven approximately 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. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Fluence's upcoming projects, however, bear in mind 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%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Fluence, so if you are interested in understanding the company at a deeper level, take a look at Fluence's company page on Simply Wall St. We've also put together a list of important aspects 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.

This article by Simply Wall St is general in nature. 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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