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When InvestingPro’s Fair Value model flagged (NYSE:SMR) as significantly overvalued on February 10, 2025, it provided investors with a crucial early warning signal. The model’s sophisticated analysis combines multiple valuation methodologies to help investors identify potential mispricings and make more informed decisions. For investors seeking similar opportunities, current overvaluation alerts can be found on our Most overvalued list.
NuScale Power Corporation, a small-cap nuclear power technology company with a market capitalization of $2 billion, develops and markets small modular reactor technology. When the Fair Value alert was issued, the company was generating modest revenue of $37 million while posting significant losses, with EBITDA at -$133.6 million and EPS at -$1.47. The stock had shown extreme volatility in the preceding months, with monthly returns swinging between -39% and +65%.
The Fair Value model’s assessment proved remarkably accurate. From the alert price of $27.46, SMR shares have declined 43% to their current level of $15.63. This movement aligns closely with InvestingPro’s initial analysis, which indicated substantial overvaluation. The model’s precision is particularly noteworthy given the stock’s volatile nature and the complexity of valuing early-stage technology companies.
Recent developments have supported the bearish thesis. While Q4 results showed revenue improvements, the company continues to face significant operating losses. More tellingly, multiple insiders, including the CEO, CTO, CFO, and other senior executives, have executed substantial share sales in recent weeks, with the CEO alone selling $1.09 million worth of stock. Despite positive industry tailwinds from Meta (NASDAQ:META)’s AI data center plans boosting power sector stocks, SMR’s fundamental challenges appear to be weighing more heavily on its valuation.
InvestingPro’s Fair Value methodology combines multiple valuation approaches, including discounted cash flow analysis, comparable company metrics, and market sentiment indicators. This comprehensive approach helps identify situations where market prices have diverged significantly from underlying fundamental value, as demonstrated in this case with NuScale Power.
To access these powerful investment insights and receive early warnings about potential market mispricings, consider upgrading to InvestingPro. The platform offers exclusive Fair Value analyses, real-time insider trading alerts, and comprehensive fundamental analysis tools to help you make better-informed investment decisions.