Energy Fuels' Q4 Earnings Coming Up: How Should You Play the Stock?

Energy Fuels Inc. (UUUU - Free Report) is set to announce its fourth-quarter results for 2024 later this month. Investors are keen to see how the company performs amidst changes in uranium sales and production costs.

Latest Earnings Predictions

The consensus among analysts suggests that Energy Fuels will report break-even earnings for the fourth quarter, a promising improvement compared to the loss of 13 cents per share from the same quarter last year. This estimate has remained steady over the prior 60 days.

Revenue Expectations

For this upcoming quarter, estimates indicate UUUU's revenue could reach approximately $45.25 million, representing a substantial increase from just $0.47 million reported in the previous year’s quarter.

Reviewing Energy Fuels’ Earnings History

In the past four quarters, UUUU has outperformed earnings estimates in two instances. However, it has missed expectations in the other half. On average, the company has experienced a significant negative earnings surprise of around 85% over the trailing four quarters.

Understanding the Earnings Prediction Model

A closer look at the Zacks model shows that predicting an earnings beat for Energy Fuels this time is not definitive. A positive Earnings ESP (Earnings Surprise Prediction) combined with a favorable Zacks Rank (either a 1, 2, or 3) increases the likelihood of an earnings beat. Unfortunately, this is not the case for UUUU currently.

Earnings ESP Status: UUUU exhibits an Earnings ESP of 0.00%. For details on how to find stocks that could outperform when earnings are reported, consider utilizing the Earnings ESP Filter.

Zacks Rank: At present, Energy Fuels holds a Zacks Rank of 3, signifying a 'Hold' status. You can view a complete list of Zacks #1 Rank stocks to explore high-potential options.

Key Factors Impacting Q4 Performance

Energy Fuels has paused ore shipments from its Pinyon mine in Arizona due to concerns from the Navajo Nation about transporting radioactive materials through their territories. Despite the shipment halt, extraction has continued, and mined ore is currently stockpiled. Consequently, the company forecasts a lower production of finished uranium, targeting between 150,000 to 200,000 pounds in 2024, a reduction from a previous estimate of 150,000 to 500,000 pounds.

A recent agreement with the Navajo Nation, facilitated by the Navajo Nation Department of Justice and Environmental Protection Agency, will allow for ore transport to resume in February.

As the fourth quarter commenced, Energy Fuels maintained an inventory consisting of 235,000 pounds of finished uranium and 805,000 pounds of uranium contained in ore, raw materials, and work-in-progress. Additionally, the company had 905,000 pounds of finished vanadium and large amounts of rare earth elements in its inventory.

During earlier quarters in 2024, Energy Fuels sold 200,000 pounds of uranium under long-term contracts at a price of $75.13 per pound. As no contract sales are expected for the impending fourth quarter, some inventory is likely to be sold in the spot market. In the first three quarters of 2024, the company sold 250,000 pounds for an average spot price of $91.51 per pound, with significant sales occurring in the first quarter to take advantage of rising prices.

Forecasts suggest that uranium sales in 2024 will not reach the elevated level of 560,000 pounds sold in 2023. Projections for the fourth quarter indicate a cap of 110,000 ounces. However, spot uranium prices averaged $76.75 per pound in Q4 2024, reflecting a 7% decline year-over-year, which is anticipated to impact UUUU's revenue for the quarter.

Operational Costs

General and administrative expenses are expected to increase due to rising salaries and additional costs related to expanding staff for business improvements.

Stock Performance and Valuation Insights

Over the past year, Energy Fuels’ stock has dropped by 23.2%, contrasting with a 10.6% gain in the overall industry. Additionally, the broader Zacks Basic Materials sector has seen a minimal rise of 0.7%, while the S&P 500 index has grown by 23.2% during the same timeframe.

Current Valuation Landscape

The stock currently trades at a forward sales multiple of 5.98, significantly higher than the industry average of 2.80. However, UUUU's valuation appears lower when compared to some competitors in the market. Notably, companies such as Cameco (CCJ) and Uranium Energy (UEC) are trading at price-to-sales ratios of 8.37 and 21.34, respectively.

Investment Considerations for UUUU

Energy Fuels is focused on increasing uranium production and enhancing its rare earth element capabilities to meet the rising demand from clean energy technologies. The company has a debt-free balance sheet that supports this growth trajectory. Its recent acquisition of Base Resources Limited underscores its commitment to becoming a leading global producer of REEs, capitalizing on burgeoning global energy demands.

Additionally, Energy Fuels has taken strides into the medical isotope market with its purchase of RadTran LLC, aiming to address the worldwide shortage of isotopes used in cancer treatments. This strategic move will enable UUUU to recover valuable isotopes from its processes that would otherwise be discarded.

Should You Invest in Energy Fuels Stock Now?

The anticipated effects of uranium sales will likely show in Energy Fuels’ revenue for the upcoming quarter. Although there has been a downturn in uranium prices this year, many believe this trend is temporary due to ongoing supply constraints and strong demand fundamentals, hinting at potential price rises in the near future. Energy Fuels is taking proactive steps to boost uranium and REE production aligned with clean energy trends.

Even though the stock carries a premium valuation, it remains a solid option for investors looking to leverage the strong long-term potential of uranium markets.

Energy, Uranium, Stocks