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On Wednesday, DA Davidson adjusted its financial outlook for Fluor Corporation (NYSE: NYSE:FLR), reducing the price target to $55 from the previous $65, while continuing to endorse the stock with a Buy rating. According to InvestingPro data, Fluor currently trades at $38.78 and shows signs of being undervalued, with a strong financial health score rated as "GOOD" by the platform’s comprehensive analysis. The firm noted that despite encountering volatility, Fluor has demonstrated a notable improvement in its cash flow for the year 2024, including the fourth quarter. The company has made progress on legacy projects and seen an expansion in Urban bookings.
Fluor’s net cash has increased by 30% year-over-year, and the market value of its investment in NuScale, a small modular reactor (SMR) company, has grown to more than three times its value from a year ago. InvestingPro analysis reveals that Fluor holds more cash than debt on its balance sheet, with a healthy current ratio of 1.69, indicating strong liquidity. The platform offers 14 additional valuable insights about Fluor’s financial position. Despite these positive developments, Fluor’s stock price has remained approximately unchanged compared to the same period last year. DA Davidson commented on the company’s financial health and market position, stating, "A broader recovery in key FLR markets and financial performance have seen ’bumps’, lending volatility along the road to a recovery in the shares."
The analyst from DA Davidson highlighted the company’s financial achievements and strategic advances, mentioning that Fluor has "still seen considerable improvement in cash flow in 2024 (incl. 4Q), inroads on legacy projects and expansion in Urban bookings." The firm also pointed out the significant year-over-year growth in net cash and the increased market value of NuScale/SMR, which stands at more than triple compared to a year ago.
Despite the stock’s performance being relatively flat compared to last year, DA Davidson sees a favorable risk-reward balance for Fluor. The firm’s perspective is supported by what they describe as an "accelerating capital return program." This optimism is captured in the analyst’s closing remark, "Risk-reward seems favorable along with an accelerating capital return program - we remain BUY." InvestingPro’s technical analysis indicates the stock is currently in oversold territory, potentially presenting an attractive entry point for investors. For a deeper understanding of Fluor’s valuation and prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. This statement underscores DA Davidson’s confidence in Fluor’s stock as a worthwhile investment despite the recent adjustment to the price target.
In other recent news, Fluor Corporation reported its financial results for the fourth quarter of 2024, revealing earnings per share (EPS) of $0.48, which missed the forecasted $0.78. The company’s revenue also fell short of expectations, coming in at $4.26 billion against a forecast of $4.48 billion. Despite this quarterly miss, Fluor’s full-year revenue increased by 5.4% to $16.3 billion, with a net income of $2.1 billion. Analysts from Vertical Research and KeyBanc Capital Markets have been closely monitoring Fluor’s strategic expansion into data centers and semiconductor markets, as well as its share repurchase program, which aims for an additional $300 million in 2025.
Fluor Corporation’s guidance for 2025 suggests moderate growth, with projected EBITDA between $575 million and $675 million and an EPS range of $2.25 to $2.75. The company anticipates approximately 15% revenue growth and continues to focus on expanding its presence in new markets. The company’s leadership transition is also noteworthy, with Jim Brewer set to assume the role of CEO, focusing on developing the next chapter of Fluor’s strategy. Additionally, Fluor is engaged in detailed negotiations regarding the monetization of its investment in NuScale, with plans to support NuScale’s commercialization and maximize shareholder value. These developments indicate a cautious yet optimistic outlook for Fluor’s future growth and diversification.
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