Fluor (NYSE: FLR) is a construction company, but it comes with a bit of a twist right now. Investors need to think carefully before they buy the stock. Here’s what’s going on and why it may entice you to buy Fluor, or it might lead you to avoid it.
The way that Fluor gets paid is very important. Historically, it had taken on price-fixed contracts, which left it on the hook if a project went over budget. It has increasingly focused on reimbursable construction contracts, where running over budget becomes the customer’s problem. At the end of 2025, 81% of the company’s $25.5 billion backlog was reimbursable. Of the $12 billion added to the backlog in the fourth quarter, 87% was reimbursable.
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Fluor is in a much stronger position than it was as a business. But there’s more to the story because Fluor has been selling its investment in NuScale Power (NYSE: SMR), a start-up in the nuclear power sector. It raised $1.35 billion in the most recent and $605 million from a previous sale. And it still has 40 million shares to sell. The cash raised improves the company’s financial position, and it is being used to repurchase shares, which will help support future earnings.
Buying the stock gets you in on a company with an improving business model and extra cash. That’s an attractive combination.
The problem is that the market isn’t ignoring the improvements in the business, given that the stock has doubled in price over the past five years. That gain has to be considered within the broader framework that construction and engineering tend to be cyclical by nature.
If there is a recession, the giant construction projects Fluor builds could be delayed or canceled. If you are a conservative investor, the risk/reward balance at a time of heightened market, economic, and geopolitical uncertainty might not be worth it. If anything goes wrong, Fluor’s stock price could see a swift drawdown.
If you own Fluor and believe the company has repositioned itself for long-term success, you probably shouldn’t sell it. And given the cash that it is raising from the sale of NuScale Power’s stock, it should have the financial strength to muddle through a weak patch. In fact, an industry downturn could turn into an opportunity thanks to the money from the NuScale exit. Fluor would have the capacity to repurchase additional stock or even make an opportunistic acquisition. Just be prepared for a pullback in the stock price if there’s a recession.
