Should You Buy, Sell, or Hold CCJ Stock Before Q3 Earnings Release?

Core Viewpoint - Cameco Corporation (CCJ) is expected to report third-quarter 2024 results on November 7, with earnings estimated at 26 cents per share, reflecting an 8.3% increase year-over-year [1][2]. Earnings and Revenue Estimates - The Zacks Consensus Estimate for Cameco's third-quarter revenues is $551 million, indicating a 28.6% growth from the previous year's quarter [3]. - Over the past 60 days, the earnings estimate has increased by 8.3% [1]. Earnings Surprise History - In the last four quarters, Cameco's earnings missed the Zacks Consensus Estimate three times and surpassed it once, with an average negative earnings surprise of 11.1% [4][5]. Production and Sales Outlook - Uranium prices have decreased by 14% since the start of 2024 but averaged $81.58 per pound in Q3 2024, which is 30% higher year-over-year [8]. - Cameco's production from its major mines, McArthur River and Cigar Lake, is expected to reach 18 million pounds each in 2024, with Cameco's total share projected at 22.4 million pounds, up from 17.6 million pounds in 2023 [9][10]. - The company plans to sell 32-34 million pounds of uranium in 2024, compared to 32 million pounds in 2023, with a need to sell 18.5-20.5 million pounds in the second half of 2024 [10]. Challenges and Costs - The average unit cost of production at McArthur River/Key Lake is expected to be higher due to ramped-up production, and ongoing maintenance costs for tier-two assets are projected between $50 million and $60 million [14]. - Procurement and supply-chain issues at the Inkai mine, including transportation challenges and inflationary production costs, are noted as headwinds [11][22]. Westinghouse Electric Company Acquisition - In November 2023, Cameco acquired a 49% interest in Westinghouse Electric Company, which is expected to incur a net loss of $170-$230 million in 2024 due to acquisition-related costs [16]. - Cameco's share of adjusted EBITDA from Westinghouse is anticipated to be between $445 million and $510 million in 2024, with a significant portion expected in the second half of the year [17]. Market Performance and Valuation - Cameco shares have appreciated 33.7% over the past three months, outperforming the industry average of 7% [19]. - The stock is trading at a forward price-to-sales ratio of 9.36, significantly higher than the industry average of 1.21 [20]. Investment Thesis - The nuclear power industry is benefiting from geopolitical events and rising low-carbon energy demand, positioning Cameco well due to its low-cost, high-grade assets [22]. - The company has contracts for average annual deliveries of 29 million pounds of uranium over the next five years, providing a buffer against potential price declines [22]. Recommendations - Improved results are anticipated for the third quarter, supported by higher sales volumes and uranium prices, suggesting that existing investors should retain their shares [23].