Fluence Energy, today's IBD 50 Stocks To Watch pick, is seeing its improved fiscal results succumb to an ugly outside day for the growth stock.
Third-quarter sales surged 124% to $536.4 million, the company reported Wednesday. Things are starting to look up for the growth stock on the bottom line as well. The company posted a loss of 20 cents per share, shrinking from a loss of 86 cents in the prior year. Adjusted gross profit margin improved significantly to 4.4%, compared with a negative 1.1% the prior year.
During the quarter, Fluence signed an agreement with AESC to procure U.S.-made battery cells. As a result, the company stands to benefit from a 10% bonus in investment tax credit for using domestic content under the Inflation Reduction Act.
The energy play raised its sales guidance for fiscal 2023 to $2 billion-$2.1 billion, while also increasing its profit guidance to $117 million-$132 million.
Analysts polled by FactSet see revenue of $481.8 million, which would be a 9% increase from the prior year, and they also see losses trimming sharply to 7 cents per share.
The IBD 50 stock has a Composite Rating of 79. Usually, you want to see a Comp Rating of 80 or higher. Meanwhile, the EPS Rating lags at 54.
But more bullishly, the Relative Strength Rating is nearly perfect at 97. The growth stock also ranks No. 2 in IBD's alternative energy group.
Growth Stock Sees Fund Interest Growing
Fluence provides energy storage products and services and cloud-based software for renewable-energy companies. The Fluence IQ Platform is an SaaS feature that helps manage renewables and storage from any provider. Fluence products help make the power grid more reliable as a result.
The joint initiative by energy leaders Siemens and AES went public in October 2021 and started trading on the Nasdaq at 28 per share, which valued the company at around $1 billion.
Shares broke out of a cup base in June and found support at the 50-day line several times before earnings, as seen in IBD MarketSmith chart analysis.
After charging above Wednesday's high, Fluence stock has plunged below that day's low, making it an outside day. The reversal has taken shares below their 50-day line. The energy stock has some work to do on building a new base and creating a new buy point.
Mutual funds own 49% of outstanding shares. More funds have been buying the energy stock over the past five quarters, showing that FLNC is under accumulation. The Accumulation/Distribution Rating of A- also shows strong interest from institutional money.
Several exchange traded funds hold shares of the growth stock. The Global X CleanTech ETF and the iShares Morningstar Small Cap Growth ETF hold shares of Fluence Energy.
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