Why NuScale Power Stock Is Back in Focus After a Major Capital Raise

NuScale Power (SMR) has moved back onto investors’ radar after the company filed for a US$750 million follow on equity offering of Class A common stock through an at the market program.

At around US$9.59 per share, NuScale Power has seen short term momentum pick up with a 30 day share price return of 14.85%. However, the share price is still down 41.20% year to date and the 1 year total shareholder return has fallen 74.29%, suggesting recent moves are more of a rebound than a full shift in sentiment.

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Bulls see NuScale Power using fresh capital and strong liquidity to turn its reactor lead into commercial contracts. Bears point to ongoing losses, dilution and no binding deals. Which story does the current valuation lean toward?

Most Popular Narrative: 90.4% Undervalued

NuScale Power last closed at $9.59 while the most followed narrative assigns a fair value of $100. That gap frames a very different story to the recent rebound in the share price.

Its my fudemental belief that retail has a strayed from real long-term value, and towards a perverse sentiment rooted purely in numbers. The market looked at NuScale's 2023 project cancellation and saw a failed company. That's the wrong frame. What actually happened is that a first-of-kind technology encountered the first regulatory hurdle and cost discovery, which is not a verdict on the technology, it's the expected friction of building something that has never been built at commercial scale before.

According to Delphic, the fair value call on NuScale Power leans heavily on long run revenue expansion, improving margins and a future earnings multiple more often seen in mature growth stories. Curious which specific assumptions have to hold for a $100 valuation to make sense, and how different that is to what the market price implies today.

Result: Fair Value of $100 (UNDERVALUED)

However, this NuScale Power narrative still faces real risks, including potential cost overruns on early projects and delays in converting its reactor pipeline into firm commercial contracts.

Another View On NuScale Power’s Valuation

The narrative fair value of $100 for NuScale Power sits a long way from our DCF model output. At a share price of $9.59, the SWS DCF model points to a value of about $2.50 per share, which suggests the stock is trading well above that estimate. Which story feels more realistic to you right now?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NuScale Power for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With such split sentiment around NuScale Power, it makes sense to move quickly, test the numbers for yourself, and weigh both sides using the 1 key reward and 3 important warning signs.

Looking For More Investment Ideas Beyond NuScale Power?

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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.