NuScale Power Corporation, a subsidiary of Fluor Enterprises SMR , is at the forefront of developing and selling modular light water reactor nuclear power plants. These cutting-edge plants are designed to supply energy for a wide range of applications, including electrical generation, desalination and hydrogen production. Central to their offering is the NuScale Power Module (NPM), a highly efficient water reactor capable of generating 77 megawatts of electricity.
What sets a NuScale plant apart from its competitors is its design, where multiple NPMs can be seamlessly combined, allowing for the creation of differently-designed sources for different use cases. This modular approach not only enhances flexibility to meet diverse energy demands but also facilitates integration of nuclear power into existing electrical grids. With innovation and sustainability at its core, NuScale is poised to shape the future of nuclear energy solutions.
The current global energy market presents a conundrum. There is a clear push to shift away from fossil fuels. But it’s also becoming evident that renewables alone won’t get us to fossil fuel-independence anywhere near soon enough. Many see uranium as the answer, given its abundant reserves worldwide (projected to last for at least 50 years) and its low-CO2 emissions. Moreover, the safety aspect of uranium energy is often underestimated, making it a more secure option than many perceive.
Though expected to be unprofitable for the next three years, NuScale’s core financials are compelling. It currently has $246.5 million in assets — significantly exceeding its liabilities worth $51.7 million — and is completely debt free. Moreover, its return on equity is forecast to be 56.9% in three years with annual revenue expected to grow at 54.1% per year. Currently trading around $7.00 a share, based on discounted cash flow, Nuscale is valued at a staggering 90.6% below its fair value. Cash flow runaway analysis likewise indicates the company’s excellent financial condition.
On the downside, the company has a negative EPS growth rate of -13.5%, significantly high P/E and PEG ratios, and negative ROE, forecast to decline at -10.1% per year. Despite its significant undervaluation, the threat of unprofitability is a risk investors aren’t willing to take.
Another challenge is that NuScale’s small modular reactor (SMR) technology has had a rocky rollout, experiencing significant cost and schedule overruns. As a result, some of its initial supporters, including Utah Associated Municipal Power Systems (UAMPS), withdrew their support. Adoption and deployment of NuScale’s design is extremely crucial to its success, otherwise the company could be burning cash for many years to come.
It’s critical that NuScale expand its presence throughout the energy industry with successful implementations. I believe their technology will be a game changer. All they need to do is execute.
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