What the TeraWulf data center deal means for Fluor
Fluor (FLR) has signed a limited notice to proceed with TeraWulf Inc. for master planning and pre-construction work on a large brownfield data center campus in North Central Kentucky.
The project, which has access to up to 480 megawatts of grid-connected power, will be led from Fluor's North American Data Center Execution Hub in Greenville, South Carolina, with the company recognizing its portion of the undisclosed contract value in the first quarter.
See our latest analysis for Fluor.
The TeraWulf data center agreement lands at a time when Fluor's 12.1% 90 day share price return contrasts with a 14.6% 30 day decline, while the 1 year total shareholder return of 26.4% points to stronger longer term momentum.
If you are looking beyond Fluor and this data center announcement, it may be a moment to scan for other power grid and infrastructure names using our 26 power grid technology and infrastructure stocks
With Fluor shares up 26.4% over 1 year but down 14.6% over 30 days, and trading about 18.5% below the average analyst price target, is this pullback a potential entry point, or is the market already pricing in future growth?
Most Popular Narrative: 15.6% Undervalued
With Fluor last closing at $45.74 against a narrative fair value of about $54.22, the current setup frames a clear gap that this narrative tries to explain.
The analysts have a consensus price target of $49.889 for Fluor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $57.0, and the most bearish reporting a price target of just $40.0.
Want to understand why this narrative leans toward higher value despite modest margin assumptions and a conservative discount rate? The story rests on a specific mix of backlog driven revenue growth, future earnings power and a re rated profit multiple. Curious which of those inputs does the heavy lifting in the model? The full narrative lays out those building blocks in plain numbers.
Result: Fair Value of $54.22 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this depends on project execution and cash flows. Delays, cost overruns or weaker collections could quickly challenge the upbeat backlog and earnings assumptions.
Find out about the key risks to this Fluor narrative.
Another View: Cash Flows Paint A Tighter Picture
The narrative fair value of $54.22 suggests Fluor is 15.6% undervalued, but the SWS DCF model points the other way, with a future cash flow value of $37.67, below the current $45.74 share price. These are two valuation tools that provide two different answers, so which one do you lean toward?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Fluor 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 61 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
The mixed signals in this article highlight both excitement and hesitation around Fluor, so act now by reviewing the underlying data and weighing 2 key rewards and 1 important warning sign.
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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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