Fluor Pivots to Low-Risk Contracts and Nuclear Energy for Long-Term Growth

Fluor (FLR) is restructuring its business model to prioritize stability and predictability over high-risk, fixed-price megaprojects. After struggling with cost overruns and pandemic-related delays between 2020 and 2021, the firm has shifted its focus toward reimbursable contracts, where clients cover labor, materials, and equipment costs plus a fee. By the end of 2025, Fluor's backlog reached $25.5 billion, with over 80% consisting of these lower-risk reimbursable agreements. This strategic pivot is designed to reduce exposure to the volatility associated with lump-sum projects, creating more predictable long-term margins despite a potential reduction in near-term profitability. A key catalyst for the company is its ownership of nearly 40% of NuScale Power (SMR), a producer of small modular reactors. This position aligns Fluor with the secular expansion of the cloud and AI markets, which are driving a massive increase in power demand and a potential capex supercycle in nuclear and industrial construction. Despite recent hurdles, including a legal payment to Santos and execution issues in 2024-2025, analysts expect a return to profitability in 2026. Earnings per share (EPS) are projected to grow at a 16% CAGR through 2028. If these estimates hold and the company continues to fund share buybacks through the sale of NuScale shares, the stock could potentially reach $100 over the next five years.