FLR
Fluor Corporation
$49.08
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Fair Value
Trading 5.2% below fair value
You pay
$49.08
Bear
$44.70
Fair
$51.75
Bull
$58.79
Bear
$44.70
-8.9%
$1.70 × 14x + net cash
Fair
$51.75
+5.4%
$1.70 × 18x + net cash
Bull
$58.79
+19.8%
$1.70 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.70)
Implied Market Multiple
28.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $57.25 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $51.75 per share.
Warnings
Price-to-book value of 2.1x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing