2025 has been a great year to own nuclear power stocks. All three of the biggest names in small modular nuclear reactors -- Nano Nuclear Energy (NNE +6.03%), NuScale Power Corporation (SMR +5.04%), and Oklo (OKLO +3.03%) -- are up year to date.
Partly, this is in consequence of President Donald Trump signing four executive orders in May, promoting American nuclear power in general and small modular reactors (SMRs) in particular. Partly, it's a recognition by investors that artificial intelligence (AI) data centers consume enormous amounts of power -- and that if the AI revolution is going to continue, then we're going to need nuclear energy to make it happen.
But who will build all these reactors? And how sure are we that they're all going to be small?
Image source: Getty Images.
Big opportunities in bigger reactors
Questions like these have me wondering if the "right" way to play nuclear isn't investing in Nano, NuScale, and Oklo at all -- or at least not exclusively. And other investors, too, seem to be having second thoughts about these stocks lately.
Over the six weeks since hitting its high in mid-October, shares of Nano Nuclear have lost 46% of their value. Oklo stock is down nearly half -- 48% -- and NuScale Power has been hit worst of all, falling 62% from its high.
Again, there are multiple reasons for this, with AI skepticism being only one. Another big reservation I suspect investors are having, about the SMR stocks, is that they're very far away from earning a profit. Of the three, only NuScale has any revenue at all coming in (and that, less than $64 million annually). Nano and Oklo are both completely revenueless. Although analysts polled by S&P Global Market Intelligence say they might start taking in at least small amounts of revenue next year, none of these companies is expected to turn profitable before 2030 at the earliest.
But one nuclear stock is. Indeed, one nuclear stock is already profitable.
Introducing Fluor Corporation
Fluor Corporation (FLR +1.23%) is an engineering and construction company, with a niche business building full-scale nuclear plants that generate 1 gigawatt and up of power. It also happens to own 38.9% of one of the more popular SMR stocks, NuScale.
This is especially interesting because, at NuScale's current implied market capitalization of $6 billion, Fluor's 38.9% interest in the subsidiary is worth about $2.3 billion. Thus, this ownership interest alone supports more than a third of Fluor's own $6.6 billion in market capitalization. Fluor also has about $1.8 billion more cash than debt on its balance sheet.
Between the two, the NuScale stake and Fluor's own cash back up 62% of the company's market capitalization, making its enterprise value effectively just $2.5 billion.
NYSE: FLR
Key Data Points
Valuing Fluor Corporation stock
And what does an investor get for $2.5 billion? At first glance, this seems too good to be true (because it is), but Fluor reported earnings of $3.4 billion over the last 12 months, giving the company an apparent enterprise-value-to-earnings ratio of less than 1.
Now, take a step back, and you'll realize that much of the "profit" making up Fluor's $3.4 billion in earnings was simply an accounting acknowledgement of how much its subsidiary, NuScale, had risen in value. Those gains will go away as NuScale's stock declines in price. Still, analysts who follow the company believe Fluor will earn about $360 million in real profit next year -- then grow that number by about 36% over the next three years.
Call that a 12% earnings annual growth rate, and at $2.5 billion in enterprise value and $360 million in earnings, Fluor stock is trading for an EV-to-earnings ratio of less than 7. Relative to the expected earnings growth, that seems like a very fair price to me.
Is it cheap enough to justify a small investment of $1,000 or $2,000? Honestly, that sounds like a no-brainer to me.
The upshot for investors
Now, am I disappointed to see Fluor's stake in NuScale declining in value, hurting the parent company's apparent profits? In a way, yes -- but also no. For one thing, Fluor has been selling down its NuScale stake to minimize its risk, capture the some of the SMR stock's gains, and pay its own taxes on those gains. For another, I never considered those "profits" from owning NuScale truly "real" in the first place -- and never fully trusted the valuation they implied.
Moreover, NuScale's pain may actually turn out to be Fluor stock's gain.
Just last week, in a little-noticed development, the U.S. Department of Energy reported that as part of Japan's commitment to invest $550 billion in the U.S. in exchange for tariff relief, that country will be sending $80 billion on the construction of 10 large nuclear power plants -- the kind Fluor helps to build.
It may not sound like great news to investors hoping to ride the profitless SMR stocks to riches. But it could be very good news indeed for Fluor stock.
