Fluor Corporation: Navigating the Energy Landscape Through Turnaround Successes

Fluor Corporation, an engineering company, is experiencing a turnaround with its focus on large projects such as infrastructure construction and energy-related projects. The company operates in segments such as Energy Solutions, Industrial, Infrastructure and Power. The turnaround is attributed to a renewed focus on cost control, improved profitability, and a shift towards higher-margin projects.

Fluor Corporation (NYSE: FLR), an engineering company specializing in large-scale projects, has been undergoing a significant turnaround, focusing on infrastructure construction and energy-related projects. The company operates in segments such as Energy Solutions, Industrial, Infrastructure, and Power. The turnaround is attributed to a renewed focus on cost control, improved profitability, and a shift towards higher-margin projects.

The company's transformation began with the appointment of David Constable as CEO in 2020. Under his leadership, Fluor transitioned from fixed-cost contracts to reimbursable contracts, where customers pay a fixed fee plus any unforeseen costs. This shift has significantly improved the company's cash flow, which had dropped to negative levels in 2021 but has since recovered [1].

Additionally, Fluor has adopted a more disciplined approach to project selection, canceling high-risk, low-margin projects in favor of low-risk, high-margin ones. This strategy has led to a reduction in overall risk and an improvement in the company's cash position. By 2021, Fluor's net cash position had improved from zero to $2.43 billion, and its debt-to-capital ratio had dropped from 60% to 23% [1].

The company's growth prospects appear promising. The rise of AI and data centers, increased investment in domestic energy, and the need to renew aging American infrastructure are expected to drive growth. Fluor is well-positioned to benefit from these trends, as it has a substantial backlog of projects in these areas [1].

However, recent insider sales have raised questions about Fluor's near-term visibility. In late June 2025, executives David E. Constable and Alvin C. Collins III sold a significant number of shares under 10b5-1 trading plans, totaling approximately $5.4 million over the past two years. While these sales were pre-arranged and part of broader wealth diversification strategies, they coincide with a 17% year-over-year decline in Fluor's backlog in Q1 2025, particularly in Energy and Mission Solutions segments [2].

Fluor's valuation is neither cheap nor expensive. The company's trailing P/E of 4.90 looks very cheap, but its forward P/E of 61 looks very expensive. Analysts are optimistic about the company's future prospects, expecting double-digit earnings growth for the foreseeable future [1].

In conclusion, Fluor Corporation's turnaround is a significant achievement, driven by strategic changes in contract structures and project selection. While insider sales raise questions about near-term visibility, the company's long-term prospects remain promising, driven by trends in AI, energy, and infrastructure. Investors should closely monitor the company's backlog and earnings growth to gauge its performance.

References:
[1] https://seekingalpha.com/article/4800259-fluor-stock-turnaround-going-well-fair-valuation-buy
[2] https://www.ainvest.com/news/fluor-corp-insider-sales-signal-sigh-navigating-sector-uncertainty-2507/