NuScale Power Plunges 54% in 3 Months: Time to Hold Tight or Exit?

Core Viewpoint - NuScale Power's shares have significantly underperformed, losing 54.4% over the past three months, compared to a 50.6% decline in the Zacks Electronics-Power Generation industry [1][2] Company Performance - The stock has underperformed its industry competitors, with BWX Technologies gaining 2.2%, while GE Vernova and Oklo lost 3.8% and 36.4%, respectively [1] - NuScale Power's underperformance is attributed to execution risks related to its plans for establishing 6 gigawatts (GW) of nuclear capacity and competition from renewable energy sources [2][5] Expansion Plans - NuScale Power is advancing its plan to support up to 6 GW of new nuclear capacity through partnerships with ENTRA1 and the Tennessee Valley Authority (TVA), involving approximately 72 small modular reactor modules [5][6] - The first plant, utilizing 12 modules, is expected to begin delivering power around 2030 [5][8] Execution Risks - The company faces several execution risks, including the need for TVA and ENTRA1 to finalize site selection, complete engineering work, and convert the current term sheet into a binding power purchase agreement (PPA) [6][8] - Discussions are ongoing, but no firm contract has been signed yet, and delays in PPA negotiations could impact revenue timelines [8][9] Competitive Landscape - NuScale Power faces stiff competition in the nuclear energy sector from companies like Oklo, BWX Technologies, and GE Vernova, which are also advancing their own technologies and partnerships [10][11][12] - Recent partnerships in the industry aim to enhance project delivery and supply chain capabilities, further intensifying competition [10][11][12] Financial Outlook - For 2026, the Zacks Consensus Estimate projects a loss of 52 cents per share, which has widened from a previous estimate of 51 cents [13] - NuScale Power's current valuation is significantly higher than the industry average, with a forward price-to-sales (P/S) ratio of 51.69X compared to the industry's 31.27X [16][17] Conclusion - Despite having technology advantages and long-term project announcements, the company faces challenges related to project timelines and substantial upfront investments, raising concerns about growth prospects [18][19]