Fluence Energy (FLNC is currently trading at a discounted valuation, making it an intriguing stock for investors to consider when deciding whether to buy, hold or sell. With a forward 12-month price-to-sales (P/S) ratio of 0.49, FLNC is trading at a lower multiple than the Zacks Alternate Energy - Other industry’s average of 5.02.
FLNC Shares are Cheap
FLNC also trades at a lower valuation compared to major Alternative Energy companies, such as GE Vernova GEV and FuelCell Energy FCEL. Currently, GE Vernova and FuelCell Energy have P/S multiples of 5.10 and 6.07, respectively.
With FLNC’s discounted valuation, investors might be thinking of buying the stock. However, considering the current uncertainty, the lucrative valuations could be a value trap for investors. Let’s delve deeper and examine FLNC’s case in detail.
Q3 Results Fail to Offer FLNC Relief
Last month, Fluence Energy reported a wider-than-expected loss for the third quarter of fiscal 2026 (ended June 30, 2026). Its revenues also lagged expectations. FLNC had reported earnings in the year-ago quarter. Revenues declined year over year as well, reflecting the downbeat performance. The company is suffering due to headwinds like battery oversupply fears, periodic execution delays and macroeconomic pressures.
Fluence Energy tweaked its fiscal 2026 guidance. Revenues are now expected in the band of $2.9-$3.1 billion compared with the prior guided range of $3.2 billion to $3.6 billion. Adjusted EBITDA is now expected in the range of ($30 million) to $10 million. The earlier expected range was $40-$60 million.
This reduction reflects the downbeat revenue outlook and an approximately $15 million upfront cost associated with a planned agreement for long-term international battery supply.
The latest earnings miss is the second such bottom-line underperformance for the company in the last four quarters. It surpassed earnings expectations once and reported in-line earnings on the other occasion. The average earnings miss is 114.5%, reflecting the overall bleak scenario.
Fluence Energy Price and EPS Surprise
Fluence Energy, Inc. price-eps-surprise | Fluence Energy, Inc. Quote
Project Delivery Delays: A Key Headwind for FLNC
Fluence Energy is being plagued by delays with respect to project deliveries. While releasing the third-quarter fiscal 2026 results, management stated that it expects $400 million in project deliveries to be delayed into fiscal 2027 due to production issues at a new international contract manufacturing facility and construction-related delays that affected the completion and start-up of a new U.S. contract manufacturing facility.
Delays in project deliveries are likely to dampen Fluence Energy’s near-term revenue growth, as reflected in the reduced guidance, by postponing milestone-based revenue recognition and customer payments. Such delays may also increase labor, logistics and storage costs, put pressure on margins and extend the cash-conversion cycle, particularly if the company has to absorb cost overruns or pay contractual penalties. Persistent execution issues may make it harder to secure new contracts. Together, these factors could create earnings volatility and constrain the company’s ability to convert its project backlog into profitable growth.
Disappointing Price Performance for FLNC
Due to the headwinds, shares of Fluence Energy have performed poorly over the past six months, losing roughly 35%, underperforming its industry, as well as FuelCell Energy and GE Vernova.
6- Month Stock Price Comparison
Conclusion: Sell FLNC Stock for Now
Agreed that the rapid build-out of AI data centers is a tailwind for Fluence Energy. AI facilities require highly reliable, flexible power systems capable of handling sudden fluctuations in electricity demand. Battery energy storage systems help stabilize voltage and frequency, reduce peak demand and support uninterrupted operations, making them an increasingly essential component of next-generation AI.
However, the near-term setup is unfavorable. The stock’s valuation discount looks less like a buying opportunity and more like a reflection of real risks ahead. With growth momentum slowing, as highlighted by the Growth Score of D, trade headwinds lingering, and management itself cutting the fiscal 2026 outlook, investors should avoid investing in FLNC stock at current levels.
Additionally, FLNC carries a Zacks Rank #5 (Strong Sell), which indicates investors should stay away from the stock for now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).