FLR
Fluor Corporation
$50.60
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 420.6% above fair value
You pay
$50.60
Bear
$7.56
Fair
$9.72
Bull
$11.88
Bear
$7.56
-85.1%
$0.54 × 14x
Fair
$9.72
-80.8%
$0.54 × 18x
Bull
$11.88
-76.5%
$0.54 × 22x
Adjust Assumptions
18.0x
0.54$
Key Value Driver
Through-cycle normalized EPS ($0.54)
Implied Market Multiple
93.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (28 analysts)
$62.33
Divergence from AlphaVal
84%
Summary
Using 7-year normalized EPS of $0.54 at a 18x cycle multiple, the base-case value is $9.72 per share. P/TBV cross-check: 2.2x.
Warnings
Price-to-book value of 2.2x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $62.33 (from 28 analysts). Our estimate is 84% below the consensus -- consider that gap carefully.
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