Is Fluor Corporation (FLR) a Buy for 2026? Valuation Appeal Amid Operational Challenges and Catalysts for Recovery

Fluor Corporation (FLR), a global engineering and construction giant, has faced significant headwinds in recent quarters, including one-time charges and project delays. However, its valuation metrics, coupled with emerging recovery catalysts, suggest a compelling case for long-term investors. This analysis evaluates FLR's current valuation, operational challenges, and potential for 2026 recovery, drawing on recent financial data and industry benchmarks.

Valuation Metrics: A Tale of Two Ratios

Fluor's trailing P/E ratio (TTM) of 1.72 as of September 2025 is starkly below its four-quarter average of 8.37, reflecting investor skepticism driven by recent losses. However, the forward P/E of 16.89 indicates optimism about future earnings, particularly as the company raises its 2025 adjusted EBITDA guidance to $510–540 million according to DCF modeling. This improvement is fueled by stronger performance in core segments like Urban and Mission Solutions, which offset declines in Energy Solutions.

The EV/EBITDA ratio, however, tells a more complex story. Fluor's LTM EV/EBITDA of -3.8x according to financial data is distorted by a $653 million charge from the Santos project ruling and a $401 million reduction in its NuScale investment. Excluding these non-recurring items, the company's enterprise value of $5.58 billion as reported by Yahoo Finance and adjusted EBITDA guidance suggest a more normalized multiple of approximately 10–11x, aligning with industry averages for firms with EBITDA in the $3–$5 million range (10.7x) according to industry benchmarks. This discrepancy highlights the potential for re-rating once the company's balance sheet stabilizes.

Operational Challenges: A Mixed Bag

Fluor's Q3 2025 results underscored its struggles. The company reported a GAAP net loss of $697 million, driven by the Santos charge and NuScale write-down. Revenue of $3.4 billion, while stable, reflected a 18% year-over-year decline. Yet, adjusted EBITDA of $161 million-a 29% year-over-year increase-signals resilience in core operations.

The broader construction sector provides context. General contractors with EBITDA between $1–$3 million command multiples of 8.2x according to industry analysis, while Fluor's adjusted EBITDA of $510–540 million (annualized) suggests it could trade at a premium if it sustains its current trajectory. However, Fluor's operating profit margin lags the industry average of 7.1%, a gap that must close for the stock to gain traction.

Catalysts for 2026 Recovery: Projects and Strategic Shifts

The most compelling argument for a 2026 rebound lies in Fluor's pipeline of high-impact projects and strategic pivots. The Savannah River Plutonium Project (SRPPF), expected to reach full release in H1 2026, is a $2 billion backlog driver for the Mission Solutions segment. This project, coupled with the completion of infrastructure projects like the Gordie Howe (Q2 2026) and I-35 Phase 2 (Q4 2026) according to market analysis, could generate consistent cash flow.

Additionally, Fluor is capitalizing on long-term growth trends. The company is pursuing opportunities in semiconductors, data centers, and advanced manufacturing, sectors poised for multi-year expansion. Its Urban Solutions segment has already secured new awards in mining and life sciences according to market intelligence, diversifying revenue streams beyond energy.

Risk Considerations

Investors must remain cautious. Fluor's Q4 2025 EBITDA of $96 million-a 42% decline year-over-year-highlights ongoing volatility. The company's reliance on large, capital-intensive projects also exposes it to arbitration risks and client delays. However, its robust backlog and focus on high-margin defense and infrastructure work mitigate some of these concerns.

Conclusion: A Buy for the Patient Investor

Fluor's valuation appears undervalued when adjusted for one-time charges, with a forward P/E of 16.89 and a normalized EV/EBITDA of 10–11x. The company's 2026 catalysts-SRPPF, infrastructure completions, and expansion into high-growth sectors-position it for a meaningful rebound. While operational challenges persist, Fluor's strategic agility and strong backlog suggest it is well-positioned to capitalize on its recovery narrative. For investors with a 12–18 month horizon, FLR offers an attractive risk-reward profile.