Why Centrus Energy Stock Dropped Today
Key Points
Uranium prices are spiking, but uranium stock Centrus is down today.
Centrus boasts positive profits, a net debt-free balance sheet, and powerful free cash flow.
- 10 stocks we like better than Centrus Energy ›
Centrus Energy (NYSE: LEU) stock tumbled 3.3% through 12:25 p.m. ET today -- and no one seems to know why.
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Round up the usual suspects
Uranium prices aren't the problem. Trading Economics data shows uranium prices going positively parabolic, up 12% over the last couple of months to $88.40 per pound. This is the highest price since May 2024 and is approaching the highest price in the last decade ($106), recorded in February 2024.
Headline news isn't the problem, either. The biggest news in the uranium market today is South Korea announcing it will build two big new nuclear plants. State-owned Korea Hydro & Nuclear Power (KHNP) hopes to secure construction permits in the early 2030s and have the reactors operational by 2037 and 2038, respectively.
This is bullish for global uranium demand -- not a reason for Energy Fuels stock fall 7%.
Is Centrus Energy stock a buy?
So why is Centrus Energy stock down today? That's an excellent question.
Priced at 46 times earnings, Centrus Energy is not a cheap stock. But at least it has earnings, which is more than I can say for uranium stocks such as Denison Mines (NYSEMKT: DNN), Energy Fuels (NYSEMKT: UUUU), or Uranium Energy (NYSEMKT: UEC). Centrus's efforts to focus on uranium enrichment, and particularly the production of high-assay, low-enriched uranium (HALEU) fuel for advanced nuclear power plants, also seem wise to me. That's a weak link in the U.S. supply chain that Centrus should attempt to fill.
With a good business model, a balance sheet brimming with more cash than debt, and positive free cash flow that dwarfs its own reported net income (the enterprise value-to-free cash flow ratio is only 34x), Centrus Energy seems to me one of the best buys in nuclear stocks today.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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