Positive Indicator for Fluor Corporation's Shares Currently
Fluor's Q2 Results and the Outlook for its Stock
The risk-reward dynamic for Fluor's stock (FLR) presents a favorable picture, albeit with a degree of uncertainty. The company's Q2 earnings report, published at the beginning of August, fell short of expectations, leading to a significant stock sell-off. However, several factors indicate a potentially attractive investment case.
In Q2, Fluor notched $1.8 billion in new bookings, with a substantial 72% being reimbursable. This high proportion of reimbursable bookings reduces execution risk and provides a strong revenue visibility[2][4]. The company's total bookings backlog stands at an impressive $28.2 billion, 80% of which is reimbursable, offering strong protection against headwinds[2][4].
Fluor also holds a majority stake in NuScale Power, giving it strategic exposure to nuclear power development. This positioning is aimed at powering the growing AI data center market, a high-growth sector[2][4]. The stock is valued attractively, with a market cap around $7B-$8.7B and a forward P/E of about 20.7, trading near $41.07. Analyst price targets average $50.57, suggesting a potential upside of 21.7%[1][3].
However, there are potential risks to consider. Macroeconomic uncertainty can impact execution, as reflected in the recent earnings disappointment and high valuation uncertainty noted by Morningstar[2][3]. Stock price volatility is another concern, due to swings in earnings and backlog conversion[2][4].
In summary, Fluor's large reimbursable backlog, nuclear exposure, and discounted valuation relative to growth prospects offer a favorable risk-reward. However, investors should weigh these positives against the high uncertainty and recent earnings challenges before positioning in the stock[1][2][3][4].
It's worth noting that NuScale Power's rise could lead to Fluor's significant exposure to nuclear power being used to power AI data centers, presenting a positive sign for the stock at current pricing levels[5].
As of writing, Fluor's share price is down roughly 23.5% across August's trading. The consensus target for the company's sales for the second quarter was roughly $4.7 billion, and the consensus target for per-share earnings was $0.56. Total bookings saw a drawdown from the $28.7 billion level at the end of the previous quarter[6].
[1] Yahoo Finance - Fluor Corporation (FLR) [2] Fluor Corporation - Q2 2022 Earnings Release [3] Morningstar - Fluor Corporation (FLR) [4] Seeking Alpha - Fluor Corporation (FLR) Q2 2022 Earnings Call Transcript [5] BusinessWire - Fluor Announces Majority Ownership Position in NuScale Power [6] MarketWatch - Fluor Corporation (FLR) Q2 2022 Earnings Call Transcript
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