Intrinsic value of Fluor - FLR

Previous Close

$46.08

  Intrinsic Value

$168.40

stock screener

  Rating & Target

str. buy

+265%

  Value-price divergence*

+205%

Previous close

$46.08

 
Intrinsic value

$168.40

 
Up/down potential

+265%

 
Rating

str. buy

 
Value-price divergence*

+205%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of FLR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 6.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.10
  14.20
  13.28
  12.45
  11.71
  11.04
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
Revenue, $m
  19,037
  21,740
  24,627
  27,694
  30,936
  34,350
  37,934
  41,685
  45,604
  49,690
  53,945
  58,373
  62,977
  67,762
  72,735
  77,903
  83,273
  88,857
  94,663
  100,703
  106,990
  113,536
  120,356
  127,464
  134,877
  142,610
  150,683
  159,112
  167,919
  177,124
  186,747
Variable operating expenses, $m
 
  20,863
  23,627
  26,562
  29,665
  32,933
  36,364
  39,954
  43,705
  47,617
  51,690
  55,875
  60,282
  64,863
  69,622
  74,569
  79,710
  85,054
  90,612
  96,394
  102,411
  108,677
  115,205
  122,009
  129,105
  136,507
  144,234
  152,303
  160,733
  169,544
  178,756
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  18,490
  20,863
  23,627
  26,562
  29,665
  32,933
  36,364
  39,954
  43,705
  47,617
  51,690
  55,875
  60,282
  64,863
  69,622
  74,569
  79,710
  85,054
  90,612
  96,394
  102,411
  108,677
  115,205
  122,009
  129,105
  136,507
  144,234
  152,303
  160,733
  169,544
  178,756
Operating income, $m
  547
  877
  1,001
  1,132
  1,271
  1,417
  1,570
  1,731
  1,898
  2,073
  2,255
  2,498
  2,695
  2,900
  3,113
  3,334
  3,564
  3,803
  4,051
  4,310
  4,579
  4,859
  5,151
  5,455
  5,772
  6,103
  6,448
  6,809
  7,186
  7,580
  7,992
EBITDA, $m
  773
  1,132
  1,282
  1,442
  1,610
  1,788
  1,975
  2,170
  2,374
  2,587
  2,808
  3,039
  3,278
  3,527
  3,786
  4,055
  4,335
  4,625
  4,928
  5,242
  5,569
  5,910
  6,265
  6,635
  7,021
  7,423
  7,844
  8,282
  8,741
  9,220
  9,721
Interest expense (income), $m
  72
  85
  133
  184
  238
  295
  355
  419
  485
  554
  627
  702
  780
  861
  946
  1,034
  1,125
  1,220
  1,319
  1,421
  1,528
  1,639
  1,755
  1,875
  2,001
  2,132
  2,269
  2,411
  2,560
  2,716
  2,878
Earnings before tax, $m
  547
  792
  868
  948
  1,033
  1,122
  1,215
  1,312
  1,413
  1,519
  1,629
  1,796
  1,915
  2,039
  2,167
  2,300
  2,439
  2,583
  2,732
  2,888
  3,051
  3,220
  3,396
  3,579
  3,771
  3,971
  4,180
  4,398
  4,626
  4,864
  5,113
Tax expense, $m
  220
  214
  234
  256
  279
  303
  328
  354
  382
  410
  440
  485
  517
  550
  585
  621
  658
  697
  738
  780
  824
  869
  917
  966
  1,018
  1,072
  1,129
  1,187
  1,249
  1,313
  1,381
Net income, $m
  281
  578
  634
  692
  754
  819
  887
  958
  1,032
  1,109
  1,189
  1,311
  1,398
  1,488
  1,582
  1,679
  1,780
  1,885
  1,995
  2,108
  2,227
  2,350
  2,479
  2,613
  2,753
  2,899
  3,051
  3,211
  3,377
  3,551
  3,733

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,961
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,216
  8,285
  9,385
  10,554
  11,790
  13,091
  14,456
  15,886
  17,379
  18,937
  20,558
  22,246
  24,000
  25,824
  27,719
  29,689
  31,735
  33,863
  36,076
  38,378
  40,774
  43,268
  45,867
  48,576
  51,401
  54,348
  57,425
  60,637
  63,994
  67,501
  71,169
Adjusted assets (=assets-cash), $m
  7,255
  8,285
  9,385
  10,554
  11,790
  13,091
  14,456
  15,886
  17,379
  18,937
  20,558
  22,246
  24,000
  25,824
  27,719
  29,689
  31,735
  33,863
  36,076
  38,378
  40,774
  43,268
  45,867
  48,576
  51,401
  54,348
  57,425
  60,637
  63,994
  67,501
  71,169
Revenue / Adjusted assets
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
  2.624
Average production assets, $m
  955
  1,087
  1,231
  1,385
  1,547
  1,718
  1,897
  2,084
  2,280
  2,484
  2,697
  2,919
  3,149
  3,388
  3,637
  3,895
  4,164
  4,443
  4,733
  5,035
  5,349
  5,677
  6,018
  6,373
  6,744
  7,131
  7,534
  7,956
  8,396
  8,856
  9,337
Working capital, $m
  1,794
  -87
  -99
  -111
  -124
  -137
  -152
  -167
  -182
  -199
  -216
  -233
  -252
  -271
  -291
  -312
  -333
  -355
  -379
  -403
  -428
  -454
  -481
  -510
  -540
  -570
  -603
  -636
  -672
  -708
  -747
Total debt, $m
  1,600
  2,369
  3,280
  4,248
  5,271
  6,348
  7,479
  8,663
  9,899
  11,189
  12,531
  13,929
  15,381
  16,891
  18,460
  20,091
  21,786
  23,548
  25,380
  27,286
  29,270
  31,335
  33,487
  35,730
  38,069
  40,509
  43,057
  45,717
  48,496
  51,400
  54,437
Total liabilities, $m
  6,091
  6,860
  7,771
  8,739
  9,762
  10,839
  11,970
  13,154
  14,390
  15,680
  17,022
  18,420
  19,872
  21,382
  22,951
  24,582
  26,277
  28,039
  29,871
  31,777
  33,761
  35,826
  37,978
  40,221
  42,560
  45,000
  47,548
  50,208
  52,987
  55,891
  58,928
Total equity, $m
  3,125
  1,425
  1,614
  1,815
  2,028
  2,252
  2,487
  2,732
  2,989
  3,257
  3,536
  3,826
  4,128
  4,442
  4,768
  5,106
  5,458
  5,824
  6,205
  6,601
  7,013
  7,442
  7,889
  8,355
  8,841
  9,348
  9,877
  10,430
  11,007
  11,610
  12,241
Total liabilities and equity, $m
  9,216
  8,285
  9,385
  10,554
  11,790
  13,091
  14,457
  15,886
  17,379
  18,937
  20,558
  22,246
  24,000
  25,824
  27,719
  29,688
  31,735
  33,863
  36,076
  38,378
  40,774
  43,268
  45,867
  48,576
  51,401
  54,348
  57,425
  60,638
  63,994
  67,501
  71,169
Debt-to-equity ratio
  0.512
  1.660
  2.030
  2.340
  2.600
  2.820
  3.010
  3.170
  3.310
  3.440
  3.540
  3.640
  3.730
  3.800
  3.870
  3.930
  3.990
  4.040
  4.090
  4.130
  4.170
  4.210
  4.240
  4.280
  4.310
  4.330
  4.360
  4.380
  4.410
  4.430
  4.450
Adjusted equity ratio
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  281
  578
  634
  692
  754
  819
  887
  958
  1,032
  1,109
  1,189
  1,311
  1,398
  1,488
  1,582
  1,679
  1,780
  1,885
  1,995
  2,108
  2,227
  2,350
  2,479
  2,613
  2,753
  2,899
  3,051
  3,211
  3,377
  3,551
  3,733
Depreciation, amort., depletion, $m
  226
  254
  281
  310
  340
  371
  404
  439
  475
  513
  553
  540
  583
  627
  673
  721
  771
  823
  877
  932
  991
  1,051
  1,114
  1,180
  1,249
  1,320
  1,395
  1,473
  1,555
  1,640
  1,729
Funds from operations, $m
  844
  833
  915
  1,002
  1,094
  1,190
  1,291
  1,397
  1,507
  1,622
  1,742
  1,852
  1,981
  2,116
  2,255
  2,400
  2,551
  2,708
  2,871
  3,041
  3,218
  3,402
  3,593
  3,793
  4,002
  4,219
  4,447
  4,684
  4,932
  5,191
  5,462
Change in working capital, $m
  138
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -38
Cash from operations, $m
  706
  906
  926
  1,014
  1,107
  1,204
  1,305
  1,412
  1,523
  1,638
  1,759
  1,870
  2,000
  2,135
  2,275
  2,421
  2,573
  2,730
  2,894
  3,065
  3,243
  3,428
  3,621
  3,822
  4,031
  4,250
  4,479
  4,718
  4,967
  5,228
  5,500
Maintenance CAPEX, $m
  0
  -177
  -201
  -228
  -256
  -286
  -318
  -351
  -386
  -422
  -460
  -499
  -540
  -583
  -627
  -673
  -721
  -771
  -823
  -877
  -932
  -991
  -1,051
  -1,114
  -1,180
  -1,249
  -1,320
  -1,395
  -1,473
  -1,555
  -1,640
New CAPEX, $m
  -236
  -133
  -144
  -153
  -162
  -171
  -179
  -188
  -196
  -204
  -213
  -221
  -230
  -239
  -249
  -258
  -269
  -279
  -290
  -302
  -314
  -327
  -341
  -355
  -371
  -387
  -404
  -421
  -440
  -460
  -481
Cash from investing activities, $m
  -741
  -310
  -345
  -381
  -418
  -457
  -497
  -539
  -582
  -626
  -673
  -720
  -770
  -822
  -876
  -931
  -990
  -1,050
  -1,113
  -1,179
  -1,246
  -1,318
  -1,392
  -1,469
  -1,551
  -1,636
  -1,724
  -1,816
  -1,913
  -2,015
  -2,121
Free cash flow, $m
  -35
  597
  581
  633
  688
  747
  808
  873
  941
  1,012
  1,086
  1,149
  1,229
  1,312
  1,399
  1,489
  1,583
  1,680
  1,781
  1,887
  1,996
  2,110
  2,228
  2,352
  2,481
  2,615
  2,755
  2,901
  3,053
  3,213
  3,379
Issuance/(repayment) of debt, $m
  184
  851
  911
  968
  1,023
  1,077
  1,131
  1,184
  1,236
  1,289
  1,343
  1,397
  1,453
  1,510
  1,569
  1,631
  1,695
  1,762
  1,832
  1,906
  1,984
  2,066
  2,152
  2,243
  2,339
  2,440
  2,547
  2,660
  2,779
  2,904
  3,037
Issuance/(repurchase) of shares, $m
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  108
  851
  911
  968
  1,023
  1,077
  1,131
  1,184
  1,236
  1,289
  1,343
  1,397
  1,453
  1,510
  1,569
  1,631
  1,695
  1,762
  1,832
  1,906
  1,984
  2,066
  2,152
  2,243
  2,339
  2,440
  2,547
  2,660
  2,779
  2,904
  3,037
Total cash flow (excl. dividends), $m
  19
  1,448
  1,492
  1,600
  1,711
  1,824
  1,939
  2,057
  2,177
  2,301
  2,429
  2,546
  2,682
  2,822
  2,968
  3,120
  3,278
  3,442
  3,613
  3,793
  3,980
  4,175
  4,380
  4,595
  4,820
  5,055
  5,302
  5,561
  5,832
  6,117
  6,416
Retained Cash Flow (-), $m
  -128
  -179
  -189
  -201
  -213
  -224
  -235
  -246
  -257
  -268
  -279
  -290
  -302
  -314
  -326
  -339
  -352
  -366
  -381
  -396
  -412
  -429
  -447
  -466
  -486
  -507
  -529
  -553
  -577
  -603
  -631
Prev. year cash balance distribution, $m
 
  1,879
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,148
  1,303
  1,399
  1,499
  1,600
  1,704
  1,811
  1,921
  2,033
  2,150
  2,256
  2,380
  2,509
  2,642
  2,781
  2,926
  3,076
  3,233
  3,397
  3,568
  3,746
  3,933
  4,129
  4,334
  4,548
  4,773
  5,008
  5,255
  5,514
  5,785
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  3,018
  1,192
  1,218
  1,234
  1,240
  1,237
  1,223
  1,200
  1,168
  1,127
  1,071
  1,016
  954
  887
  816
  743
  669
  595
  523
  453
  387
  326
  271
  221
  177
  139
  107
  81
  60
  44
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, and project management services worldwide. It operates through four segments: Energy, Chemicals & Mining; Industrial, Infrastructure & Power; Maintenance, Modification & Asset Integrity (MMAI); and Government. The Energy, Chemicals & Mining segment offers a range of design, engineering, procurement, construction, fabrication, and project management services to upstream, downstream, chemical, petrochemical, offshore and onshore oil and gas production, liquefied natural gas, pipeline, and metals and mining markets. It also provides consulting services, such as feasibility studies, process assessment, and project finance structuring and studies. The Industrial, Infrastructure & Power segment offers design, engineering, procurement, construction, and project management services to the transportation, life sciences, manufacturing, water, and power sectors. The MMAI segment provides facility start-up and management, plant and facility maintenance, operations support, and asset management services to the oil and gas, chemicals, life sciences, mining and metals, consumer products, and manufacturing industries. The Government segment offers engineering, construction, logistics, base and facilities operations and maintenance, contingency response, and environmental and nuclear services to the United States government, as well as governments internationally. This segment also provides engineering and construction services, logistics, and life-support services, as well as contingency operations support services to the defense sector. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.

FINANCIAL RATIOS  of  Fluor (FLR)

Valuation Ratios
P/E Ratio 22.8
Price to Sales 0.3
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 9.1
Price to Free Cash Flow 13.7
Growth Rates
Sales Growth Rate 5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -1.7%
Cap. Spend. - 3 Yr. Gr. Rate -3.9%
Financial Strength
Quick Ratio 24
Current Ratio 0.1
LT Debt to Equity 48.6%
Total Debt to Equity 51.2%
Interest Coverage 9
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 5.3%
Return On Total Capital 6.5%
Ret/ On T. Cap. - 3 Yr. Avg. 9.6%
Return On Equity 9.2%
Return On Equity - 3 Yr. Avg. 12.5%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 4.1%
Gross Margin - 3 Yr. Avg. 5.6%
EBITDA Margin 4.4%
EBITDA Margin - 3 Yr. Avg. 5.4%
Operating Margin 2.9%
Oper. Margin - 3 Yr. Avg. 4.2%
Pre-Tax Margin 2.9%
Pre-Tax Margin - 3 Yr. Avg. 4.2%
Net Profit Margin 1.5%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate 40.2%
Eff/ Tax Rate - 3 Yr. Avg. 34.5%
Payout Ratio 42%

FLR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FLR stock intrinsic value calculation we used $19037 million for the last fiscal year's total revenue generated by Fluor. The default revenue input number comes from 2016 income statement of Fluor. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FLR stock valuation model: a) initial revenue growth rate of 14.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for FLR is calculated based on our internal credit rating of Fluor, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Fluor.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FLR stock the variable cost ratio is equal to 96%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for FLR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.6% for Fluor.

Corporate tax rate of 27% is the nominal tax rate for Fluor. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FLR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FLR are equal to 5%.

Life of production assets of 5.4 years is the average useful life of capital assets used in Fluor operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FLR is equal to -0.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3125 million for Fluor - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 139.491 million for Fluor is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Fluor at the current share price and the inputted number of shares is $6.4 billion.

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COMPANY NEWS

▶ The Biggest Loser: Fluor Flops 4.8%   [May-05-17 05:53PM  Barrons.com]
▶ Fluor misses 1Q profit forecasts   [May-04-17 04:54PM  Associated Press]
▶ Fluor Reports First Quarter Results   [04:15PM  Business Wire]
▶ Fluor Corporation Announces Quarterly Dividend   [May-03-17 07:01PM  Business Wire]
▶ Fluor to Present at Wells Fargo Industrials Conference   [Apr-25-17 04:30PM  Business Wire]
▶ Fluor Awarded Offshore Compression Platform FEED by BP   [Apr-24-17 07:04AM  Business Wire]
▶ Marathon Petroleum selects Fluor for more work on major refinery project   [Apr-11-17 02:40PM  American City Business Journals]
▶ Trumps Wall Is 30 Feet of Scary Politics for Builders   [Mar-24-17 05:01AM  Bloomberg]
▶ Fluor Announces Executive Transition Plan   [Mar-08-17 06:03PM  Business Wire]
▶ Fluor Awarded Contract for Woodfibre LNG Project in Canada   [Feb-16-17 10:00PM  Business Wire]
▶ Fluor Selected for Bauxite Mining Project in Guinea   [Feb-06-17 06:37AM  Business Wire]
▶ Fluor Corporation Announces Quarterly Dividend   [Feb-01-17 07:25PM  Business Wire]
▶ Great Lakes Announces Changes to Board of Directors   [Jan-26-17 06:48AM  GlobeNewswire]
▶ Fluor Awarded Refinery Project in Chile   [Jan-04-17 07:05AM  Business Wire]
▶ Better Buy for 2017: Caterpillar Inc. vs. ABB Ltd.   [Dec-26-16 08:23AM  at Motley Fool]
▶ Fluor-Led Team Completes Tappan Zee Bridge Towers   [Dec-15-16 12:48PM  Business Wire]
Stock chart of FLR Financial statements of FLR Annual reports of FLR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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