Fluor Corp (FLR, Financial) has recently experienced a daily gain of 3.17% and a 3-month gain of 25.82%. However, its Loss Per Share stands at 0.4. This raises a critical question: is the stock significantly overvalued? This article aims to provide a comprehensive valuation analysis of Fluor (FLR). Stick around for a detailed exploration.
Introduction to Fluor Corp
Fluor Corp is a leading global provider of engineering, procurement, construction, fabrication, operations, and maintenance services. The company serves a wide range of end markets, including oil and gas, chemicals, mining, metals, and transportation. It's organized into three core segments: urban solutions, mission solutions, and energy solutions. In 2022, Fluor generated $13.7 billion in revenue.
The current stock price of Fluor (FLR, Financial) is $37.76, which is significantly higher than the GF Value of $23.05. This discrepancy prompts a deeper analysis of Fluor's intrinsic value.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value that the stock should ideally trade at. If the stock price is significantly above this line, it is overvalued, and its future return is likely to be poor. Conversely, if it's significantly below, its future return will likely be higher.
Fluor (FLR, Financial), with a market cap of $5.40 billion, is estimated to be significantly overvalued based on the GuruFocus Value calculation. This suggests that the long-term return of its stock is likely to be much lower than its future business growth.
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Fluor's Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to review a company's financial strength before purchasing its shares. Fluor's cash-to-debt ratio of 2.33 ranks better than 70.82% of 1607 companies in the Construction industry. This indicates that Fluor's financial strength is fair.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Fluor has been profitable for 7 out of the past 10 years. However, its operating margin of 0.18% ranks worse than 76.33% of 1618 companies in the Construction industry. This indicates fair profitability.
Growth is a critical factor in a company's valuation. Fluor's 3-year average revenue growth rate is worse than 71.25% of 1555 companies in the Construction industry, indicating poor growth.
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) can also shed light on its profitability. Over the past 12 months, Fluor's ROIC was -2.9, while its WACC came in at 11.66.
Conclusion
In conclusion, Fluor (FLR, Financial) stock is estimated to be significantly overvalued. The company's financial condition is fair, and its profitability is also fair. However, its growth ranks worse than 0% of 1324 companies in the Construction industry. To learn more about Fluor stock, check out its 30-Year Financials here.
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