What Does NuScale’s 327% 2024 Rally Mean for Investors After Cancellation of Key Project?

If you have been watching NuScale Power lately, you are probably wondering what to make of the stock’s eye-popping moves. Over the past year alone, NuScale shares have soared more than 327%, an astonishing run that has surely caught the attention of anyone interested in innovative energy technology. And if you look three years back, the stock is up 140.5%. There is real momentum here, whether it is the company’s small modular reactor designs generating buzz, or growing optimism about nuclear energy's future role. Clearly, something has shifted the market’s perception of risk and potential reward.

But with all that excitement, you might be asking whether growth is still on the horizon, or if the stock price has gotten ahead of itself. That is where a valuation check becomes essential. When we look at NuScale’s value score—a simple tally of how many key checks point to the stock being undervalued—NuScale earns a 1 out of 6. This suggests that only one valuation method indicates the company might be undervalued at the current price.

In the next section, I am going to break down the different valuation methods that factor into that score and help you decide how much room for upside or downside is really left. Stick around, because at the end of this article we will look at a smarter, even more insightful way to judge if NuScale Power stock is a bargain or a risk.

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 Cash Flows

A Discounted Cash Flow (DCF) model aims to estimate what a company is really worth today by projecting its future cash flows and discounting them back to their present value. This process provides an intrinsic value based on how much cash the company is expected to generate.

For NuScale Power, the current Free Cash Flow stands at approximately -$96.9 million, indicating ongoing investment and development costs that are typical for early-stage innovators. Looking ahead, analyst estimates and extrapolations suggest that free cash flow might gradually turn positive, reaching $15.25 million by 2029 and continuing to increase in the following years.

Using the two-stage free cash flow to equity model, the estimated intrinsic value per share is $1.30. In comparison to NuScale’s current share price, the DCF analysis suggests the stock is a significant 2,600% overvalued.

In summary, while NuScale’s technology may offer future potential, its cash flow projections and current valuation indicate that the share price is significantly ahead of the business fundamentals.

Result: OVERVALUED

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

Our DCF analysis suggests NuScale Power may be overvalued by 2599.8%. Find undervalued stocks based on DCF analysis or create your own screener to find better value opportunities.

Approach 2: NuScale Power Price vs Book

The Price-to-Book (PB) ratio is especially meaningful for companies that are not yet profitable, such as NuScale Power, because it allows investors to assess a stock's valuation based on the company's net assets rather than earnings, which may still be negative during early growth stages. For these types of companies, book value can provide a more stable benchmark of fundamental worth.

Growth expectations and risk also play a critical role in determining what counts as a "normal" PB ratio. Fast-growing companies or those in higher-risk sectors may command higher multiples, while mature or lower-growth businesses may have lower ratios, all other factors being equal.

Currently, NuScale Power trades at a PB ratio of 6.77x. This is notably higher than both the Electrical industry average of 1.95x and the peer group average of 14.74x. Traditional comparisons suggest that the shares are priced at a significant premium to their book value, even among companies in similar positions.

Simply Wall St's proprietary "Fair Ratio" extends beyond industry and peer averages by considering NuScale's specific factors such as earnings growth, industry trends, profit margins, risk profile, and company size. This method is designed to filter out market noise so investors can assess value more effectively based on the company's individual outlook and characteristics.

When comparing NuScale’s actual PB ratio of 6.77x with its Fair Ratio, the difference is significant enough to interpret the shares as overvalued on this metric.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your NuScale Power Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story or perspective on a company, connecting what you believe about its future, such as revenue growth, profit margins, or competitive strengths, to a set of financial forecasts and ultimately a Fair Value estimate.

Unlike simple ratios or historical analysis, Narratives give you a dynamic, holistic way to justify your investment view by blending numbers with real-world context. Narratives are easy to create and explore on Simply Wall St's Community page, where millions of investors share their views and data-driven insights every day.

By using Narratives, you can see whether your Fair Value estimate suggests the stock is a buy or a sell compared to the current share price. The best part is, Narratives update automatically as new information arrives, such as earnings reports or industry news, so your outlook stays relevant without extra work.

For NuScale Power, one Narrative might forecast rapid commercial success and a Fair Value above $40 per share, while another could predict ongoing challenges and a Fair Value below $17. Whether you lean optimistic or cautious, Narratives help you make decisions with both data and conviction.

Do you think there's more to the story for NuScale Power? Create your own Narrative to let the Community know!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com