Fermi (FRMI) Valuation Check After Hybrid Cooling MOU for Its West Texas Energy Campus

Fermi (FRMI) just signed a non binding MOU with hybrid cooling specialist MVM EGI Zrt., teaming up to design advanced water saving cooling for its 11 gigawatt private energy campus in West Texas.

See our latest analysis for Fermi.

Despite this ambitious cooling partnership, Fermi’s share price return has been under pressure, with a sharp 30 day share price return of minus 47.55 percent and a year to date share price return of minus 54.93 percent. This suggests sentiment is still resetting even as long term growth potential comes into clearer focus.

If this kind of early stage infrastructure story interests you, it could be worth exploring fast growing stocks with high insider ownership as a way to spot other fast moving opportunities with aligned leadership.

With the stock trading far below analyst targets even as Fermi advances key infrastructure partnerships, investors face a central question: is this a deeply discounted entry into a next generation grid leader, or is the market already pricing in future growth?

DCF Valuation Check, Is the Pullback Enough?

Our DCF model estimates Fermi's fair value at approximately $5.67 per share, which is well below the latest close at $14.66, pointing to material overvaluation on this framework.

The SWS DCF model projects a company’s future cash flows, then discounts them back to today's dollars using an appropriate rate to reflect risk and time. For a capital intensive, early stage platform like Fermi, with limited public track record and no established earnings profile, those long dated assumptions do a lot of work in driving the output.

That context matters because Fermi is still in the project build out phase where cash flows are expected to be back weighted and volatile, especially given its mix of nuclear, gas, renewables and storage assets. The combination of high upfront spending and uncertain timing around revenue ramps means small changes in long term assumptions can shift the DCF sharply. Yet on today’s inputs the current price still sits significantly above modelled value.

Look into how the SWS DCF model arrives at its fair value.

Result: DCF Fair value of $5.67 (OVERVALUED)

However, significant permitting delays or cost overruns at the West Texas campus could erode confidence and force painful equity raises at unattractive levels.

Find out about the key risks to this Fermi narrative.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fermi 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 916 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 Fermi Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in just a few minutes by using Do it your way.

A great starting point for your Fermi research is our analysis highlighting 1 key reward and 1 important warning sign 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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