Fluor (FLR): Valuation Check After Winning the Long-Term Texas State Highway 6 Expansion Project

Fluor (FLR) is back on investors radar after taking the lead on a long term upgrade of State Highway 6 in Texas, a 12 mile expansion that reinforces its position in large public infrastructure work.

See our latest analysis for Fluor.

The latest contract win lands at an interesting moment, with the share price at $45.45 and a 90 day share price return of 9.33% contrasting with a weaker 1 year total shareholder return of negative 18.8%. This suggests near term momentum is improving even as longer term holders remain under water.

If this kind of infrastructure led story has you thinking about what else might be setting up for the next leg higher, now is a good time to explore aerospace and defense stocks.

With revenue still growing but net income swinging sharply lower, and the stock trading only around 11% below analyst targets, is Fluor quietly undervalued here or is the market already pricing in a full infrastructure driven rebound?

Most Popular Narrative Narrative: 10.9% Undervalued

With Fluor last closing at $45.45 against a narrative fair value of $51, the story hinges on how its future cash and earnings power evolve.

The analysts have a consensus price target of $49.889 for Fluor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $57.0, and the most bearish reporting a price target of just $40.0.

Read the complete narrative.

Analysts are factoring in steady revenue expansion, thinner margins, and a higher future earnings multiple. Want to see which assumptions really carry this valuation story?

Result: Fair Value of $51 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent project delays and foreign exchange swings could squeeze margins and disrupt cash generation, forcing investors to rethink the infrastructure rebound story.

Find out about the key risks to this Fluor narrative.

Another View: Cash Flow Says Something Different

While the narrative fair value points to upside, our DCF model is more cautious, putting fair value at $44.74, slightly below the current $45.45 price. If cash flows do not ramp as hoped, could today’s “discount” really be a small premium in disguise?

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 908 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 story differently or want to test your own assumptions against the numbers, you can build a custom view in minutes: 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.

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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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