NuScale Power Stock Before Q4 Earnings: Smart Buy or Risky Move?

Core Viewpoint - NuScale Power is set to report its fourth-quarter 2024 results, with expectations of significant declines in sales and increased losses year-over-year, while the company is positioned to benefit from rising demand for clean energy solutions, particularly in powering data centers [1][2][3]. Group 1: Financial Performance Expectations - The Zacks Consensus Estimate for fourth-quarter sales is $1.23 million, indicating a year-over-year decline of 73.03% [2]. - The consensus mark for fourth-quarter loss remains at 11 cents per share, reflecting a year-over-year increase of 56% [2]. Group 2: Demand and Strategic Initiatives - NuScale's performance is likely driven by strong demand for electricity from AI-supported data centers and clean energy initiatives [3]. - The company is implementing strategic initiatives to align resources for commercialization and revenue-generating contracts [3]. Group 3: Collaborations and Supply Chain - NuScale's collaboration with ENTRA1 Energy is gaining traction, focusing on a commercial model that meets scalability and reliability needs [4]. - The establishment of a supply chain, including a partnership with Doosan Enerbility, enhances manufacturing readiness and reduces lead times [5]. Group 4: International Opportunities - NuScale is expanding its international presence, particularly in East and Southeast Asia, Eastern Europe, and Africa, with partnerships in Ghana, Romania, and Korea [6]. Group 5: Stock Performance and Valuation - NuScale Power shares have surged 553.4% over the past 12 months, outperforming the Zacks Computer & Technology sector and the Zacks Electronics-Power Generation industry [7]. - Despite the stock's performance, it is considered overvalued with a forward price/sales ratio of 67.76X, significantly higher than its median of 17.74X and the sector's 6.35X [10]. Group 6: Energy Demand Trends - Data center power consumption in the U.S. is projected to rise from 25 gigawatts in 2024 to over 80 gigawatts by 2030, presenting a significant opportunity for NuScale's SMR technology [13]. - The company's 77-megawatt Light Water Reactor design is expected to receive Standard Design Approval by mid-2025, positioning it to meet growing energy needs [15]. Group 7: Interest from Tech Giants - Major technology companies like Amazon, Microsoft, Alphabet, and Oracle are committing to using nuclear energy, including SMRs, to meet sustainability goals, positively impacting NuScale's market positioning [16][17]. - The alignment of energy strategies with sustainable nuclear options is driving demand for SMRs, placing NuScale at the forefront of this emerging market [18]. Group 8: Challenges and Market Position - Despite advancements, NuScale faces challenges in a competitive energy market, including the rise of renewable energy sources and regulatory hurdles [20]. - The delayed commercialization of SMR technology and high operating expenses are hindering financial stability, with a current Zacks Rank of 4 (Sell) indicating caution for investors [21].