The design and material selection for fuel rods in Small Modular Reactors (SMRs) play a critical role in ensuring both the neutronic efficiency and thermal safety of the reactor core. This study presents a detailed comparative analysis of the neutronic behavior and heat transfer performance of a standard fuel rod configuration using two distinct cladding materials: Zircaloy-4 and stainless steel. Simulations were conducted using the SCALE code package, employing modules suitable for neutron transport and heat generation modeling under steady-state conditions.The investigation focused on key parameters such as the effective multiplication factor (k-eff), neutron flux distribution, and axial power profile, as well as the impact of cladding material on heat conduction away from the fuel. Zircaloy-4, known for its low neutron absorption cross-section and favorable thermal conductivity, demonstrated higher neutronic reactivity and improved thermal performance compared to stainless steel. However, the use of stainless steel—often considered for its mechanical robustness and corrosion resistance—resulted in increased parasitic neutron absorption and a corresponding decrease in reactivity, requiring compensatory design adjustments.The comparative results underscore the trade-offs inherent in cladding material selection, particularly in advanced reactor systems like SMRs where compact core design and passive safety features are prioritized. The findings contribute to the optimization of fuel design by providing quantitative insights into how material choices affect reactor behavior at both the neutronic and thermal levels. This study supports ongoing efforts in the development of next-generation reactors by highlighting material-performance interdependencies that must be carefully considered during the early stages of reactor design and licensing.