Cameco Stock Price Decreases 21% YTD: Should You Buy the Dip?

Core Viewpoint - Cameco (CCJ) shares have declined significantly, with a year-to-date drop of 20.9%, contrasting with the industry's return of 2.8% and the S&P 500's decline of 4.9% [1][4]. Group 1: Stock Performance and Market Context - The decline in Cameco's stock aligns with a 29% decrease in uranium prices over the past year, including a 12% drop this year [4]. - Cameco's stock is currently trading below its 50-day and 200-day moving averages, indicating a bearish trend following a death crossover on March 4, 2025 [5][6]. - Peer Centrus Energy (LEU) has seen an 11% gain this year, highlighting the relative underperformance of Cameco [4]. Group 2: Financial Performance - For FY24, Cameco's revenues rose 21% year-over-year to $2.2 billion (CAD$3.14 billion), driven by higher sales volumes and improved average realized prices [8]. - In the uranium segment, sales volume increased by 5% and prices rose by 17%, contributing to a 24% increase in full-year revenues [9]. - Adjusted earnings per share were reported at 47 cents (CAD 0.67), down 24% year-over-year but above the consensus estimate of 42 cents [10]. Group 3: Production and Future Outlook - Cameco plans to produce 18 million pounds of uranium at both McArthur River/Key Lake and Cigar Lake in 2025, with projected uranium deliveries of 31-34 million pounds [11][12]. - Production from the joint venture Inkai faced challenges, with a total production of 7.8 million pounds in 2024, slightly lower than the previous year due to supply chain issues [15]. - Kazakhstan's new Mineral Extraction Tax (MET) will increase from 6% to 9% in 2025, impacting Cameco's cost structure [16]. Group 4: Market Valuation and Investment Considerations - Cameco's stock is trading at a forward price-to-sales ratio of 6.84, significantly higher than the industry's 1.08 and above its five-year median of 6.05 [20]. - The company's Value Score of F indicates a stretched valuation, suggesting that the stock is not currently cheap [21]. - Despite the challenges, Cameco aims to maintain financial strength and flexibility to boost production and capitalize on market opportunities [22].