Reassessing NuScale Power (SMR) After Recent Volatility And Small Modular Reactor Progress
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If you are trying to figure out whether NuScale Power’s current share price really reflects its potential, the key question is what you are paying for its future versus what you are getting today.
The stock has been volatile recently, with a 6.7% decline over the last 7 days, a 28.3% decline over 30 days, and a 23.2% decline year to date, while the 1 year return sits at a 27.3% decline compared with longer term 3 year and 5 year returns of 24.7% and 24.3% respectively.
Recent news around NuScale Power has focused on its small modular reactor technology, regulatory milestones and project partnerships, which together shape how investors view the company’s long term prospects. These developments help explain why the share price has seen sharp moves as the market reassesses both the risks and potential of future projects.
On our valuation checks, NuScale Power currently records a value score of 1 out of 6. The rest of this article will walk through what different valuation methods say about that number and then finish with a broader way to think about the company’s value beyond any single model.
NuScale Power scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those cash flows back into present value.
For NuScale Power, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $460.39 million. Analyst and extrapolated projections suggest free cash flow remains negative through 2029, then turns positive in 2030 at $103.66 million, with further estimated positive cash flows through 2035.
When all these projected cash flows are discounted back to today in $, the DCF model arrives at an estimated intrinsic value of $7.67 per share. In comparison with the current share price, the DCF output implies the stock is about 63.3% overvalued on this cash flow view.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests NuScale Power may be overvalued by 63.3%. Discover 49 high quality undervalued stocks or create your own screener to find better value opportunities.
For companies that are not yet consistently profitable, price-based multiples linked to earnings can be hard to interpret, so price to book is often a more practical yardstick. It compares what the market is paying for each dollar of net assets on the balance sheet.
What counts as a normal P/B ratio depends on what investors expect in terms of future growth and how they view the company’s risks. Higher growth potential or stronger balance sheets can support a higher P/B, while higher risk or weaker profitability can point to a lower one.
NuScale Power currently trades on a P/B of 3.42x. That sits above the Electrical industry average of about 2.65x and below the peer group average of 21.60x. Simply Wall St also applies a proprietary “Fair Ratio” model, which estimates what a reasonable P/B might be for NuScale Power given factors such as its industry, market value, profit profile, growth expectations and specific risks. Because this Fair Ratio is tailored to the company, it can be more informative than a simple comparison with broad industry or peer averages.
With the Fair Ratio not available here, it is difficult to draw a firm conclusion about whether the current 3.42x P/B is high, low or about right.
Result: ABOUT RIGHT
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Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories you create about a company that link your view of its future revenues, earnings and margins to a financial forecast and then to a fair value.
On Simply Wall St, Narratives sit in the Community page and give you an easy way to write down your assumptions, plug in your numbers and instantly see how your fair value compares with the current share price. This allows you to judge for yourself whether NuScale Power looks attractively priced or not.
Because Narratives update automatically when new information such as earnings, news or analyst targets are added, they can help you keep track of how your thesis holds up as conditions change rather than relying on a one-off valuation.
For example, one NuScale Narrative might lean closer to a fair value around US$60.00 based on higher revenue growth and earnings expectations, while another might anchor around US$15.00 with much more cautious assumptions. Seeing both side by side can help you decide which story you think is more realistic and what that means for your own decision making.
Do you think there’s more to the story for NuScale Power? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SMR.
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