Is NuScale Power’s Stock Rally Justified After Recent Government Partnership News?

• If you have ever wondered whether NuScale Power is still a bargain or poised for a comeback, you are in the right place.
• The stock has been on a wild ride, jumping 7.5% in the past week, but still down nearly 53% over the last month and about 33% for the past year. It remains up 13% year-to-date.
• Market sentiment has shifted after recent headlines spotlighted NuScale’s progress securing new government partnerships and advancing key reactor projects. This has fueled fresh debates about the company’s long-term business model. These updates have led both speculation and optimism to resurface around NuScale’s future growth trajectory.
• With a valuation score of 1 out of 6, NuScale currently appears undervalued in just one area, raising plenty of questions about how best to analyze what it is truly worth. In the next section, we will break down the numbers the usual way, and at the end, reveal a smarter way to judge value, so stick around.

NuScale Power scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: NuScale Power Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is widely used to estimate a company's intrinsic value by projecting its future free cash flows and discounting them back to today's dollars. This approach helps investors gauge what a business might truly be worth, regardless of near-term market swings.

For NuScale Power, the latest reported Free Cash Flow stands at -$284 million, signaling considerable investment and cash outflow at this stage of its business cycle. Looking ahead, analysts estimate continued negative cash flows over the next several years, with projections finally turning positive in 2029, where Free Cash Flow is forecast to reach about $27 million. By 2035, simply extrapolating from available forecasts, annual Free Cash Flow could climb as high as $149 million. While these longer-term numbers give some hope for future profitability, it is important to note that figures beyond 2029 are not consensus forecasts but rather extrapolations, so there is elevated uncertainty attached.

Based on these inputs, the DCF model calculates an intrinsic fair value of $3.20 per share. Compared to the current share price, this suggests NuScale Power stock is about 525% overvalued at present. Even with future growth prospects, current valuations appear dramatically out of step with the company’s cash flow reality.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests NuScale Power may be overvalued by 525.0%. Discover 919 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for NuScale Power.

Approach 2: NuScale Power Price vs Book

The price-to-book (PB) ratio is often a go-to valuation metric for companies like NuScale Power, where traditional earnings remain negative and profitability is still out on the horizon. This metric shows how much investors are willing to pay for each dollar of net assets, making it particularly useful for new or rapidly evolving businesses whose future profits are uncertain.

Generally, the "normal" PB ratio for a company will depend on growth expectations and perceived risks. Higher anticipated growth can justify a higher PB multiple, while greater risks typically push the ratio lower. For perspective, NuScale Power currently trades at a PB ratio of 6.72x. This is well above the industry average for Electrical companies, which sits at just 2.38x, but notably below the peer group average of 18.32x.

Simply Wall St’s proprietary “Fair Ratio” concept goes a step beyond simple peer or industry comparisons by incorporating specific company factors such as projected growth, risk profile, profitability, market cap, and the sector landscape. This tailored approach is more insightful than relying solely on broad group averages, as it recognizes that each company’s set of opportunities and risks is unique.

When comparing NuScale Power’s PB ratio to the Fair Ratio, there is a noticeable mismatch. The stock’s current multiple is well above what would be considered fair given its fundamentals. This suggests that even after recent declines, NuScale Power’s PB valuation remains higher than warranted by its underlying business outlook.

Result: OVERVALUED

PB ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your NuScale Power Narrative

Earlier we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is an investor’s story that connects their expectations for a company, such as future revenue, profits, and margins, to a fair value estimate. This approach makes an investor's perspective on where the company is heading much clearer than numbers alone ever could.

Narratives help bridge the gap between NuScale Power’s unique story and concrete financial forecasts. They offer investors an easy, accessible tool to map their beliefs to a real-world valuation. Available right on Simply Wall St’s Community page, Narratives are used by millions of investors to express and update their outlooks. Each Narrative links assumptions about growth, risks, and catalysts directly to investment decisions.

Because these Narratives update dynamically as new company news or earnings are released, you can always see how fair value estimates evolve in real time. For example, some NuScale Power Narratives reflect strong confidence in rapid industry expansion and set a high fair value. Others take a more cautious approach, emphasizing funding concerns or project risks, and result in more conservative price targets.

Do you think there's more to the story for NuScale Power? Head over to our Community to see what others are saying!

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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