FLUOR CORPORATION (FLR): what the price requires

At today's price, FLUOR CORPORATION (FLR) is priced for -0.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/FLR

Headline

FieldValue
TickerFLR
CompanyFLUOR CORPORATION
Current price$49.79/sh
CompositionUrban Solutions 59% / Energy Solutions 23% / Mission Solutions 18%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed1.7%
Operating margin (mid-cycle)2.8%
Margin compression implied-1.1pp
Trailing margin (depressed year)-2.3%
Implied growth-0.1%
Multiple paid10x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~4.8pp.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.18σ
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.71x5expensive
Earnings2.33x2expensive
Relative1.34x3expensive
Growth2.73x2expensive

Families that call it expensive: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=12)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$14.773.37xyesReference only (OCF-based, capex excluded): OCF $0.0B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$37.291.34xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.3x / 18.0x / 20.7x (bear / base = reference held flat / bull), EV/EBITDA 17.15x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$25.571.95xyesBV/sh $19.41, ROE (TTM) 12.2%, ke 9.3%
Two-Stage Excess ReturnAsset$29.161.71xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$23.762.10xyesRev $15.2B, growth -8% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.6x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$19.542.55xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.08B × (1−21%) / WACC 8.2% → EPV (no growth)
Residual IncomeAsset$29.891.67xyesBV $19.41 + 5yr PV of (ROE (TTM) 12.2% − Kₑ 9.3%) × BV; BV grows 7.9%/yr
Graham NumberAsset$30.921.61xyes√(22.5 × EPS $2.19 × BVPS $19.41) — Graham's conservative floor
EV/EBITDA RelativeRelative$28.891.72xyesEBITDA $0.18B × sector EV/EBITDA 12.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$1.8427.06xyesEPS $2.19 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$22.842.18xyesBV $19.41 × (ROIC 9.6% / WACC 8.2%)
P/Sales SectorRelative$256.490.19xyesRevenue $15.18B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$23.682.10xyesEPS $2.19 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$2.2b
Net debt / NOPAT (after-tax)-6.51x (net cash)
Net debt / operating income (pre-tax)-5.14x (net cash)
Interest coverage10.0x
Share count CAGR (dilution)1.0%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 2.8%); the trailing year was depressed.

Bullet Takeaways

Fluor's trailing numbers look ugly because the cycle is at a trough: trailing operating margin is slightly negative on project charges. Read on through-the-cycle margins, the price near $53.68 works out to about 11 times normalized operating income, implying roughly 4% operating growth a year for five years, which is broadly within range of what the firm has delivered.

The balance sheet is the opposite of fragile. Fluor holds net cash of over $2 billion, runs interest coverage above ten times, and has been monetizing its NuScale stake for billions in proceeds, funding a large buyback. This is a contractor with a fortress balance sheet, not a stretched one.

The story is a deliberate shift toward lower-risk, reimbursable contracts. Backlog stands around $25.7 billion at 82% reimbursable, and recent awards were almost entirely reimbursable. The bet is that cleaner contracts plus a nuclear, data-center, and energy pipeline turn a trough into a steadier earnings stream.

Bull Case

Start with the bear case, because it is sitting right on the surface: Fluor's trailing operating margin is negative, the first quarter of 2026 carried a $37 million charge on a mining project and a $96 million legal charge tied to an Afghanistan lawsuit, and revenue has been declining. A glance at the trailing income statement says avoid. But the question is whether the data supports that fear or undermines it, and on closer look the trailing numbers are trough numbers distorted by legacy and one-time items, not the run-rate of the business.

The underlying machine is healthier than the headline. Fluor produced operating cash flow of $110 million in the first quarter, its strongest first quarter in nine years, and the balance sheet is genuinely strong: net cash of over $2 billion and interest coverage above ten times. The company has been monetizing its stake in NuScale for roughly $2.4 billion in proceeds since late 2025, with full monetization expected by the middle of 2026, and it used that capital to repurchase $516 million of stock in a single quarter. A contractor buying back stock aggressively from a net-cash position is a different risk profile from the leveraged, fixed-price Fluor of years past.

The strategic shift is the real bull case. Fluor has deliberately moved away from the fixed-price contracts that caused its historical losses and toward reimbursable work, where the client bears the cost risk. Backlog stands around $25.7 billion at 82% reimbursable, and first-quarter awards were almost entirely reimbursable, while the legacy problem backlog has shrunk to under $200 million. Its filing notes the firm often is "selected as contractor first and then negotiate a lump-sum price with the client," which "may reduce the risk associated with bidding in competition" [FY2025 10-K, accession 0001124198-26-000007], and emphasizes the project-level discipline where "each project team reviews the progress and execution" against its cost estimate [FY2025 10-K, accession 0001124198-26-000007]. Against a pipeline reportedly near $60 billion in nuclear power, data centers, mining, and energy, the bet is that a de-risked contract mix plus a strong end-market converts to steadier earnings, with management guiding 2026 adjusted earnings to $2.60 to $2.80 a share.

Bear Case

The balance sheet itself is strong, so the structural fragility in Fluor is not leverage; it is the working-capital and contract-risk profile of the engineering-and-construction model. The cash position that looks like a fortress is partly a function of customer advances received at the start of projects, and those drain as work proceeds. The filing is explicit: advances "diminish toward the end of the construction phase," so "our cash position is reduced as customer advances are utilized, unless they are replaced by advances on o" new projects [FY2025 10-K, accession 0001124198-26-000007]. In other words, the net-cash cushion depends on a continuous flow of new awards refilling it. The company states plainly that "our revenue and earnings are largely dependent on new awards" and that the "award and timing of projects is unpredictable" [FY2025 10-K, accession 0001124198-26-000007]. A slowdown in new awards would shrink both earnings and the cash buffer at the same time.

The contract-charge risk has not been eliminated, only reduced. Even with a backlog that is 82% reimbursable, the remaining fixed-price and lump-sum exposure is where losses come from, and Fluor has a long history of exactly that. The first quarter of 2026 proved the point: a $37 million hit on a mining project from declining field productivity and a $96 million legal charge. The filing describes the lump-sum process where the firm negotiates a fixed price with the client [FY2025 10-K, accession 0001124198-26-000007], and a single large project going wrong can swallow a quarter's profit. The 2026 adjusted EBITDA guidance was narrowed downward, to $525 million to $560 million, partly because of the mining cost growth and a project slowdown tied to Middle East geopolitics, a reminder that estimate revisions still move the numbers.

The valuation leaves modest room for disappointment. The price is read off normalized, through-the-cycle margins rather than the depressed trailing ones, which is the right approach, but it means the price already gives Fluor credit for a recovery that has to actually happen. On trailing reality, no valuation family reaches the price; the support comes entirely from the normalization. If new awards slow, if another fixed-price project sours, or if the nuclear and data-center pipeline converts more slowly than hoped, the earnings recovery that justifies the price stalls, and the stock has to lean on a buyback funded by a one-time NuScale windfall that does not repeat.

Valuation

Fluor is a cyclical contractor whose trailing earnings are depressed by project charges, so the price is read against normalized, through-the-cycle operating income rather than the trough. On that basis, the price near $53.68 (June 27, 2026) works out to about 11 times mid-cycle operating profit, which inverts to an assumption of roughly 4% operating growth a year for five years. That is a single solve under a 10.5% cost of capital with 4% terminal growth, so it is approximate, but the message is that the priced-in assumption is within range, broadly consistent with what the company has recently delivered when the cycle cooperates.

The X-ray needs careful reading here, because the trailing inputs are distorted. On trailing numbers no valuation family reaches the price: the asset-based methods land in the high-$20s off a book value of $19.41 and a return on equity around 12%, the earnings-power method lands near $20 because normalized EBIT is dragged down by the trough, and even the relative method on a sector multiple lands below the price. That is why the surface characterization reads as rich on every frame. The reconciliation is that those frames are penalizing Fluor for a trough year; the normalized inversion, using through-the-cycle margins on current revenue, is what produces the within-range reading.

The honest synthesis is that this is a recovery-and-quality bet, not a deep-value one. The balance sheet is excellent, net cash over $2 billion with strong interest coverage, and the contract mix has been deliberately de-risked toward reimbursable work. Management's 2026 adjusted earnings guidance of $2.60 to $2.80 a share is the near-term test of whether the normalization the price assumes is materializing.

Catalysts

The most recent catalyst was the first-quarter 2026 report, which was a mixed but net-constructive print. Fluor delivered operating cash flow of $110 million, its strongest first quarter in nine years, repurchased $516 million of stock, and reported backlog of about $25.7 billion at 82% reimbursable with new awards of $2.7 billion. Offsetting that were a $37 million charge on an Americas mining project and a $96 million legal charge tied to an Afghanistan lawsuit, which led management to narrow 2026 adjusted EBITDA guidance to $525 million to $560 million and set adjusted earnings guidance of $2.60 to $2.80 a share.

The biggest discrete catalyst is the NuScale monetization. Fluor has generated roughly $2.4 billion in proceeds from selling down the stake since late 2025, received an additional $1.35 billion in the first quarter, and expects full monetization by the end of the second quarter of 2026. That capital is funding the buyback and strengthening an already net-cash balance sheet, so the pace and completion of those sales is a near-term swing factor for capital returns.

The forward story is the award pipeline. Fluor has pointed to a potential project pipeline near $60 billion, plus another $40 billion under evaluation over three years, concentrated in nuclear power, small modular reactors, data centers, mining, gas-fueled energy, and uranium enrichment. Early-stage awards including a data-center project and small-modular-reactor work are the visible leading edge. The watch items are the conversion rate of that pipeline into reimbursable backlog, any new fixed-price project charges, and the timing of awards, since the company's earnings and even its cash position depend on a steady flow of new work.

Sources: Fluor Q1 2026 results, Fluor Newsroom; Fluor Q1 2026 8-K, trims EBITDA outlook, StockTitan; Fluor Q1 2026 earnings transcript, Motley Fool; Can Fluor's backlog support 2026 revenue, Yahoo Finance; Fluor Q1 2026 8-K exhibit, SEC.

Peer Cohorts (Per Segment, With Filing Citations)

Urban Solutions (reported)

Energy Solutions (reported)

Mission Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive FLR report on boothcheck