Fluor’s new rare earth role in Texas
Fluor (FLR) has been selected by USA Rare Earth as an engineering, procurement and construction management partner for the Round Top Rare Earth Project in Texas, putting the company into focus for investors tracking critical minerals exposure.
See our latest analysis for Fluor.
Fluor’s selection for the Round Top project comes after it recently reached mechanical completion on BASF’s large Zhanjiang Verbund site, and the share price has shown mixed momentum, with a 9.83% 30 day share price return but a 17.43% decline in 1 year total shareholder return.
If this critical minerals story has your attention, it could be a good moment to broaden your search with aerospace and defense stocks as another way to research companies tied to defense related demand.
With Fluor shares up 9.83% over 30 days but showing a 17.43% decline in 1 year total return, plus a current price of US$44.80 versus a US$50.50 analyst target, is there genuine value here, or is the market already pricing in future growth?
Price-to-Earnings of 2.1x: Is it justified?
At a last close of US$44.80, Fluor is trading on a P/E of 2.1x, which looks low relative to both the wider US market and its construction peers.
The P/E ratio tells you how much investors are currently paying for each dollar of reported earnings, so it links the share price directly to profitability. For a company like Fluor that provides engineering, procurement and construction services across multiple end markets, this can reflect how confident the market is that current earnings are sustainable.
Here, the 2.1x P/E stands well below the US market average of 19.5x, the US Construction industry average of 37.4x and a Fair P/E estimate of 6x. That is a wide gap. If earnings quality and future profits settle closer to that Fair P/E level, there is room for the market multiple to move higher, even without changes in overall sector valuations.
Explore the SWS fair ratio for Fluor
Result: Price-to-Earnings of 2.1x (UNDERVALUED)
However, you still have to weigh risks, such as annual net income shrinking 64% and a 17.43% 1-year total return decline, which may signal fragile investor confidence.
Find out about the key risks to this Fluor narrative.
Another view: DCF flags a different story
While the 2.1x P/E hints at value, our DCF model suggests a different picture, with Fluor trading around US$44.80 versus an estimated future cash flow value of US$37.55. That indicates a premium instead of a discount. This raises the question: which signal do you place more weight on, earnings or cash flows?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fluor for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 883 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Build Your Own Fluor Narrative
If you see the numbers differently or prefer to run your own checks, it only takes a few minutes to build a custom view with Do it your way
A great starting point for your Fluor research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
Looking for more investment ideas?
If you are serious about building a stronger portfolio, do not stop at one company. Use the screener to see what else could fit your game plan.
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- Cast a wider net across value opportunities by scanning these 883 undervalued stocks based on cash flows that currently trade below their estimated cash flow value.
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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