Why Cameco's Ugly Earnings Miss Might Be Good News in Disguise

Cameco (NYSE: CCJ) recently reported ugly second-quarter results. The nuclear fuel supplier's revenue fell 7%, while its adjusted earnings per share missed the analysts' consensus estimate by a mile (0.18 Canadian dollars per share vs. CA$0.36 per share, or $0.13 to $0.26).

However, things for the uranium company weren't as bad as they initially looked. The earnings miss was almost entirely due to lower equity earnings from its investment in Westinghouse Electric, which it co-owns with Brookfield Renewable. That trend could quickly reverse as its owners are preparing to take Westinghouse public, which could unlock significant value for Cameco.

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Weighed down by Westinghouse

Cameco bought a 49% interest in Westinghouse in late 2023, with Brookfield Renewable purchasing the remaining 51% stake. The deal valued Westinghouse at CA$8.2 billion ($5.9 billion) at the time of its closing.

As a co-owner of Westinghouse, Cameco accounts for its interest in the business on its financial results using the equity method of accounting in Canadian dollars. During the second quarter, Cameco reported a CA$10 million ($7.2 million) loss attributable to its Westinghouse share. That was down from CA$126 million ($90.4 million) in earnings in the year-ago period. However, that was entirely due to some lumpiness in Westinghouse's business. Cameco's equity earnings from Westinghouse were higher in 2025 due to its participation in the construction of two nuclear reactors at a power plant in the Czech Republic.

Westinghouse: A hidden asset, not a liability

While Westinghouse's earnings declined in the second quarter, its future is bright. Its technology platform operates across more than half the global nuclear fleet. Meanwhile, the company has a pipeline of up to 91 of its AP1000 reactor opportunities, which will drive demand for Cameco's uranium and fuel services businesses. The global nuclear resurgence has made Westinghouse more valuable since Cameco bought its stake. According to an estimate by Desjardins Securities, Westinghouse is now worth about CA$10.8 billion ($7.8 billion).

Westinghouse is still in the early stages of going public, having only recently filed a Form S-1 with the Securities and Exchange Commission regarding its proposed IPO. It hasn't yet set a price, nor an IPO date. Further, it might not go through with the IPO if market conditions deteriorate.

However, the window for IPOs has opened wide this year, especially for those related to the nuclear energy sector. Advanced nuclear reactor company X-Energy completed its IPO in April, raising more than $1 billion. Nuclear fuel company Standard Nuclear followed it up by completing its IPO in July, raising $150 million. While X-Energy initially popped 27% after going public, it has since cooled off and is now marginally down from its IPO price. Standard Nuclear, on the other hand, hasn't fared well at all. It slumped 10% on its debut and is down more than 45% from its IPO price. This tepid response could give Westinghouse pause.

Westinghouse's potential IPO could be a major catalyst

Westinghouse hurt Cameco's second-quarter financial results due to the way it accounts for earnings. However, investors shouldn't let that obscure the value embedded in this investment, which Cameco and Brookfield Renewable could soon unlock with an IPO. If they can price and time the IPO right, it could unlock significant value for Cameco shareholders.

Matt DiLallo has positions in Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Cameco. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.