With the business potentially at an important milestone, we thought we'd take a closer look at Fluence Corporation Limited's (ASX:FLC) future prospects. Fluence Corporation Limited provides water and wastewater treatment, and reuse solutions for the municipal, commercial, and industrial markets worldwide. The AU$143m market-cap company announced a latest loss of US$8.8m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Fluence's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Fluence is bordering on breakeven, according to some Australian Machinery analysts. They expect the company to post a final loss in 2022, before turning a profit of US$1.4m in 2023. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 80% is expected, which is rather optimistic! 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, however, take into account that typically 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 198%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
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 compiled a list of essential aspects you should further examine:
Historical Track Record: What has Fluence's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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