FLR

We rate FLUOR CORP (FLR) as a Reduce with a composite score of 42.7/100 at a current price of $53.10. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (50th percentile) and stability (36th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (23th percentile) and value (30th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), Very High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

FLUOR CORP holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 42.7/100 places it at rank #3151 in our full 7,333-stock universe. At $6.8B in market capitalization, FLUOR CORP is a mid-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -20% combined with momentum at the 50th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of -2% (-25.3pp vs sector) narrow to operating margins of -3% (-10.3pp vs sector) and net margins of 8.8%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $53.10, FLUOR CORP is trading at a premium to fundamental value. Our value factor score of 30/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 5.7x (a 70% discount to the sector median of 19.1x), P/B of 2.6x, P/S of 0.6x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Very High uncertainty rating to FLUOR CORP. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 1.50), significant leverage (151% debt-to-equity), below-average price stability (36th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.50); significant leverage (151% debt-to-equity); below-average price stability (36th percentile); weak quality scores (23th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 36th percentile and quality factor at the 23th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our very high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate FLUOR CORP's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 46.5%, and the balance sheet is managed within acceptable parameters (D/E: 151%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; FLUOR CORP falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, FLUOR CORP receives a Reduce rating with a composite score of 42.7/100 (rank #3151 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), Very High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 34/100.

Our analysis does not support a constructive view on FLUOR CORP at this time. The combination of limited competitive advantages, very high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.