Following the pullback that began in late January, we believe Fluor is currently at an attractive entry point for patient investors willing to endure near-term volatility. Investors appear to be growing impatient with the extended timeline for Fluor’s monetization of its equity interest in NuScale; however, we think the market is underestimating the potential upside. Fluor is trading at what we consider a fair price for the company, excluding its NuScale stake, which means investors are essentially getting a free call option on NuScale’s success at the current stock price. Additionally, despite a decline in its backlog in 2024 and ongoing cash burn from legacy projects extending into 2025, we believe the market is not fully recognizing the company’s operational improvements. Fluor has significantly reduced the risk profile of its backlog, and we think the enhancement in cash flows has set the stage for accelerated share repurchases and the potential reinstatement of the dividend.
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