President Donald Trump says he wants the U.S. to quadruple its nuclear power output by 2050, from 100 gigawatts to 400 gigawatts. In May, he signed four executive orders aimed at accelerating the development of new nuclear power plants in the United States. Among other things, those orders direct:
- The Nuclear Regulatory Commission to approve or deny new nuclear reactor licenses within 18 months of receiving applications (an acceleration from the current timeline of about five years).
- The creation of a pilot program that would have three new experimental reactors approved and operating by July 4, 2026 -- less than 12 months from now.
- The Department of Energy (DOE) to begin deploying advanced small modular nuclear reactors at DOE-owned locations by the end of 2027.
- The Pentagon to have at least one nuclear reactor operational on a military base by September 2028.
- The DOE to generally improve the nation's nuclear supply chain, including by promoting domestic enrichment of uranium, both U.S.-mined and imported.
If all of this makes you think that now might be a good time to invest in nuclear power stocks, well, you're not alone.
Image source: Getty Images.
Who's doing best so far?
Three start-up nuclear companies developing "micro" and somewhat larger "small" modular nuclear reactors -- Nano Nuclear Energy (NNE +3.28%), NuScale Power (SMR +5.90%), and Oklo (OKLO +7.79%) -- have all outperformed the S&P 500 over the past year. Nano's outperformance is currently the smallest, but NuScale for example is up 160% in 52 weeks, and Oklo's stock is up more than 620%.
By comparison, nuclear power plant builder Fluor (FLR +0.88%) stock's performance has been relatively tame. Up 19% over the past year, it has also outperformed the S&P 500. But if you ask me, Fluor stock should actually be doing much better than these smaller companies, because its valuation is so much cheaper ... especially relative to its earnings.
If you've got $1,000 or so lying around, and have been wanting to put it to work in a nuclear stock, Fluor just might be the one you've been waiting for.
NYSE: FLR
Key Data Points
How to value Fluor stock
Last week, I went so far as to call Fluor "the smartest nuclear stock" money could buy. I came to this conclusion based on the fact that Fluor owns a majority interest in small modular reactor builder NuScale, yet has a smaller market capitalization than NuScale's $10.3 billion implied market cap (according to the latest data from S&P Global Market Intelligence), as well ass Fluor's track record of being profitable for the past three years. Contrast that with NuScale, Oklo, and Nano Nuclear, all of which remain unprofitable.
The consensus view among analysts covering Fluor is that it will earn $470 million in 2026, nearly $530 million in 2027, and $638 million in 2028. Its 2024 and projected 2025 earnings are abnormally much higher and much lower, respectively, than these numbers. But assuming analysts are correct that Fluor's earnings volatility will finally settle down starting next year, $470 million in earnings on an $8.7 billion market cap values Fluor stock at only 18.5 times forward earnings.
This seems a reasonable price to me, given the steady earnings growth analysts are predicting.
Speaking of earnings, earnings quality for the company is good, with real free cash flow (FCF) largely backing up the GAAP numbers on Fluor's income statement. Analysts forecast it will generate positive free cash flow of $343 million already this year, making the price-to-free-cash-flow ratio 25. Back out the net cash on its balance sheet, and Fluor's enterprise-value-to-FCF ratio drops to just 21. Analysts expect its FCF to grow by more than 20% annually for at least the next three years, to $598 million by 2028.
That puts it very close to an EV/FCF/growth ratio of 1.0, which would qualify Fluor stock as a value stock. And if you further subtract out the value of Fluor's NuScale stake, I'd argue that it's cheap enough to make the company more like a deep value stock.
When compared to most nuclear companies that aren't earning any profits at all, this cheap valuation makes Fluor not only one of the best ways to play the nuclear power renaissance, but a just plain cheap stock to invest in, period.
