Can Fluor Stock Deliver Windfall Returns to Patient Investors?

Understanding the Fundamentals

Fluor (NYSE: FLR) has experienced significant volatility in 2025, painting a complex picture for prospective investors. The engineering and construction firm’s stock trajectory tells a story of corporate transformation rather than straightforward growth. Early in the year, shares tumbled 37% before recovering to a 15% year-to-date gain at their peak. Yet recent weakness has eroded those gains, leaving the stock down approximately 17% for the year.

The underlying reason for this turbulence lies in a fundamental shift in how Fluor operates. The company spent years struggling with fixed-price contracts that created substantial financial pressures when project costs exceeded initial estimates. This business model flaw forced management to pivot toward a more sustainable approach centered on reimbursable arrangements—where the company recovers actual expenses plus a management fee rather than bearing cost overruns.

The Business Transformation Taking Shape

By the end of Q3 2025, Fluor’s project backlog reached $28.2 billion, with an impressive 82% derived from reimbursable contracts. This represents meaningful progress in the company’s restructuring efforts. From a strategic standpoint, this shift should provide more predictable profit margins going forward, as the company is no longer exposed to the same magnitude of downside risk on individual projects.

However, growth concerns temper this optimistic narrative. The backlog declined 10% year-over-year, suggesting that despite operational improvements, demand for Fluor’s services may be softening. Additionally, earnings volatility remains problematic for investors attempting to establish fair valuations, with one-time items continuing to distort quarterly results.

The NuScale Investment Question

Fluor’s early stake in NuScale Power (NYSE: SMR), a company developing small modular reactors, initially appeared to be a potential wealth driver. At one point during 2025, NuScale shares surged nearly 200% as investors grew excited about the technology’s prospects. Recognizing this window of opportunity, Fluor capitalized on the enthusiasm by selling a portion of its holding in October 2025, raising approximately $600 million.

The reality, however, is more sobering. NuScale has yet to construct or commercially deploy a single SMR unit, meaning the technology remains unproven at scale. The stock’s current position—down roughly 10% year-to-date—reflects cooling enthusiasm as investors confront the timeline and execution risks inherent to an early-stage nuclear technology company.

Critically, the cash proceeds from Fluor’s partial stake sale will not flow directly to shareholders through a dividend. Instead, management intends to reinvest these funds into business operations or deploy them to improve the company’s balance sheet. Fluor plans to monetize its remaining NuScale holdings by mid-2026, but given current price levels, the value recovery appears significantly lower than the October sale price. Investors banking on NuScale delivering transformational returns to Fluor shareholders may face disappointment.

Valuation Challenges in Transition

Assessing Fluor’s current valuation presents genuine difficulties. Historical losses mean traditional price-to-earnings metrics offer little analytical value. The price-to-sales ratio, while theoretically more reliable for cyclical businesses, currently trades above its five-year average—a signal potentially indicating overvaluation rather than attractive entry pricing.

Construction and engineering work tends to be inherently cyclical, making consistent earnings difficult to forecast. This cyclicality, combined with the company’s ongoing restructuring and exposure to NuScale’s volatility, creates substantial uncertainty around appropriate valuation levels.

Investment Conclusion

Fluor Stock appears positioned for a measured recovery rather than dramatic wealth creation. While the shift toward reimbursable contracts represents genuine operational improvement, this alone does not justify aggressive investment positioning. The NuScale diversion adds speculation rather than tangible value at current levels.

Conservative investors should probably look elsewhere, as Fluor’s path forward remains clouded by cyclical headwinds, valuation ambiguity, and continued execution risk. Only those with higher risk tolerance and faith in management’s turnaround strategy should consider building positions at present valuations.