Energy Fuels Inc. UUUU is anticipated to record a wider loss and a year-over-year revenue decline when it reports third-quarter 2024 results on Nov. 1.
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The Zacks Consensus Estimate for Energy Fuels’ third-quarter loss is pegged at 5 cents per share, suggesting a wider number from the 2 cents reported in the third quarter of 2023. The estimate has been unchanged over the past 30 days.
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The consensus estimate for UUUU’s revenues is $5.10 million, indicating a 54% slump from the year-ago quarter's actual.
Energy Fuels’ Earnings Surprise History
UUUU’s earnings beat the Zacks Consensus Estimates in two of the trailing four quarters, missed in one and met the same in another quarter. The company has a trailing four-quarter negative earnings surprise of 58.33%, on average. The trend is shown in the chart below.
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What the Zacks Model Unveils for UUUU Stock
Our proven model does not conclusively predict an earnings beat for Energy Fuels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: UUUU has an Earnings ESP of 0.00%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped Energy Fuels’ Q3 Performance
Uranium decreased 11.54% since the beginning of 2024 as concerns among investors about global supply had eased. Despite the dip, uranium prices averaged $81.58 per pound for the third quarter of 2024 and were 30% higher than the third quarter of 2023. Prices had picked up near the end of the third quarter, boosted by a series of stimulus packages in China and country’s move to increase sustainable energy development with nuclear energy. China is building 28 nuclear reactors. Interest in nuclear power also gained momentum in the United States.
The company has three long-term contracts with major U.S. nuclear utilities. In January 2024, Energy Fuels sold 200,000 pounds of uranium for $75.13 per pound under its existing portfolio of long-term contracts. In March, it sold 100,000 pounds of uranium on the spot market for $102.88 per pound. In June 2024, it sold another 100,000 pounds of uranium for $85.90 per pound.
As of the second-quarter 2024 end, the company held 285,000 pounds of finished uranium and 653,000 pounds of uranium in ore and raw materials and work-in-progress inventory.
Considering that uranium prices were above $80 per pound through the third quarter of 2024, the company is likely to have sold part of its inventory at the spot market.
However, we expect uranium sales to be lower than the substantial sale of 180,000 pounds to a major U.S. nuclear utility in the third quarter of 2023. This transaction led to uranium concentrate revenues of $10.5 million for Energy Fuels in the prior-year quarter.
Thus, elevated sales in the prior-year quarter are expected to have led to an unfavorable comparison for UUUU’s revenues in third-quarter 2024.
Energy Fuels expects to produce 150,000-500,000 pounds of finished uranium in 2024, depending on the timing of the ramp-up of production at the Pinyon Plain, La Sal and Pandora mines, and the White Mesa mill. Till then, it intends to buy uranium and uranium/vanadium ore on the spot market to fulfill its contract requirements, replace sold inventory, meet contract obligations and gain exposure to future price increases. The rise in uranium purchases is expected to have impacted its third-quarter earnings.
Selling, general and administrative expenses (SG&A) are expected to have been higher due to increased salaries and benefits related to the additional headcount associated with the business enhancement efforts.
Lower sales of uranium and prices, combined with higher SG&A expenses, an increase in uranium purchases and elevated operating costs, are expected to have weighed on UUUU’s third-quarter earnings.
UUUU’s Price Performance & Valuation
Shares of Energy Fuels have declined 15.5% in the past year against the industry's 47.2% growth. In comparison, the Zacks Basic Materials sector and the S&P 500 have rallied 15.6% and 39.8%, respectively, in the same period.
UUUU’s Price Performance Against Industry & Broader Market
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The UUUU stock is currently trading at a forward sales multiple of 8.62, well above the industry average of 3.40.
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The company is, however, cheaper than peers Cameco CCJ and Uranium Energy UEC, who are trading at price-to-sales ratios of 9.85 and 36.30, respectively.
Investment Thesis on Energy Fuels
Backed by its debt-free balance sheet, Energy Fuels is ramping up uranium production while advancing rare earth element (REE) capabilities to capitalize on the surge in demand for both in clean energy technologies. The recent acquisition of Base Resources Limited will support its target to become a leading global producer of REEs. Energy Fuels’ industry-leading mineral resources and a pipeline of high-quality, large-scale development and exploration projects provide a competitive edge.
By acquiring RadTran LLC, the company recently made its foray into the medical isotope market. These play a crucial role in cancer treatment and there has been a global scarcity of these isotopes. Using RadTran’s know-how, UUUU will recover valuable isotopes from its process streams, recycling the material that would otherwise have been lost to disposal, which is a solid move.
Should You Buy UUUU Stock Now?
The expected lower uranium sales and increased costs are likely to have affected the company’s profitability in the to-be-reported quarter. Even though uranium prices have declined so far this year, we believe this is temporary as supply pressure and solid demand fundamentals point to higher sustained uranium prices in the future. Energy Fuels is investing to boost its capacity to meet the increased demand for uranium and REEs on clean energy trends.
Despite its expensive valuation, Energy Fuels is a great stock to own to benefit from the solid long-term fundamentals of the uranium markets.
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