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

Energy Fuels Inc. (UUUU) is set to announce its fourth-quarter earnings for 2024 later this month. Investors are anticipating higher revenues and break-even earnings, driven by an increase in uranium sales.

The Zacks Consensus Estimate for Energy Fuels’ fourth quarter stands at break-even earnings, a notable improvement over the loss of 13 cents per share seen in the same quarter last year. This forecast has remained stable over the last two months.

The predicted revenue for UUUU is $45.25 million, which represents a significant rise from the merely $0.47 million reported in the fourth quarter of 2023.

Energy Fuels’ Earnings Surprise History

In the last four quarters, Energy Fuels has exceeded the Zacks Consensus Estimates in two instances while falling short in the other two. The company has recorded a negative earnings surprise of 85% on average over this period.

Insights from the Zacks Model for UUUU Stock

The current model does not guarantee an earnings beat this quarter for Energy Fuels. A positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) enhance the chances of an earning surprise. However, this is not applicable for UUUU at the moment.

Earnings ESP: Energy Fuels has an Earnings ESP of 0.00%. This metric is useful for identifying top stocks before their reports.

Zacks Rank: Currently, UUUU has a Zacks Rank of 3.

Factors Impacting Energy Fuels’ Q4 Performance

Energy Fuels halted ore shipments from its Pinyon mine in Arizona due to concerns from the Navajo Nation regarding the transport of radioactive materials. Nonetheless, mining operations continued, with the mined ore stored on-site. As a result, the company's updated guidance estimates uranium production for 2024 at 150,000 to 200,000 pounds, which is lower than the previously forecasted 150,000 to 500,000 pounds.

Recently, a significant agreement was reached among Energy Fuels, the Navajo Nation Department of Justice, and the Navajo Nation Environmental Protection Agency, granting permission to resume ore transport in February.

At the start of the fourth quarter, Energy Fuels' inventory comprised 235,000 pounds of finished uranium and 805,000 pounds of uranium in various forms. Additionally, the company held 905,000 pounds of finished vanadium, along with tons of other rare earth materials.

In the first quarter of 2024, Energy Fuels sold 200,000 pounds of uranium through long-term contracts priced at $75.13 per pound. As of now, there are no scheduled contract sales for the fourth quarter, leading the company to likely sell some of its inventory at prevailing spot market prices. In the first three quarters of 2024, Energy Fuels sold 250,000 pounds of uranium on the spot market at an average price of $91.51 per pound, primarily during the first quarter to take advantage of higher market rates.

Overall, it is expected that uranium sales for Energy Fuels in 2024 will be lower than the substantial 560,000 pounds sold in 2023, thus limiting fourth-quarter sales to approximately 110,000 ounces. Uranium spot prices averaged $76.75 per pound in the fourth quarter, reflecting a 7% decline from the previous year, which will likely impact UUUU’s revenue figures.

Moreover, selling, general, and administrative costs are expected to rise due to increased salaries and benefits as a result of the company's focus on business expansion.

Stock Performance & Valuation of UUUU

Over the past year, Energy Fuels' shares have dropped by 23.2%, contrasting with a 10.6% increase in the wider industry. In comparison, the Zacks Basic Materials sector and the S&P 500 have recorded gains of 0.7% and 23.2%, respectively.

Valuation Metrics of UUUU

Currently, UUUU is valued at a forward sales multiple of 5.98, well above the industry average of 2.80. However, it is still less expensive than peers such as Cameco (CCJ) and Uranium Energy (UEC), which have price-to-sales ratios of 8.37 and 21.34, respectively.

Investment Consideration for UUUU

With a debt-free balance sheet, Energy Fuels is enhancing its uranium production capabilities and expanding into rare earth elements (REEs) to address the growing demand associated with clean energy technologies. The acquisition of Base Resources Limited aligns with its goal to become a leading global REE producer. Energy Fuels also has a robust pipeline of mining and exploration projects, giving it a competitive edge in the market.

Additionally, the company recently entered the medical isotope sector by acquiring RadTran LLC. These isotopes are essential for cancer treatment, and there is currently a global shortage. Using RadTran’s expertise, Energy Fuels will recuperate valuable isotopes from its operations, diverting materials that would typically be disposed of.

Should You Consider Buying Energy Fuels Stock Now?

The anticipated impact of uranium sales is likely to reflect on Energy Fuels’ revenues in the upcoming quarter. Despite the recent downturn in uranium prices, many believe it is temporary given the ongoing supply pressures and robust demand fundamentals that suggest a rise in uranium prices is forthcoming. Energy Fuels continues to invest in its capacity to meet the increasing demand for uranium and rare earth elements as the clean energy landscape evolves.

Overall, despite its seemingly high valuation, UUUU could be a valuable addition to an investment portfolio as it aligns with the strong long-term fundamentals of the uranium market.

Energy, Uranium, Investing