ZACKSยท2025-04-04 17:15Core Viewpoint - Energy Fuels Inc. and Cameco Corporation are significant players in the uranium production industry, currently facing challenges due to declining uranium prices, which have reached an 18-month low of $64 per pound, down 10.8% year to date due to ample supply and uncertain demand [1][2]. Group 1: Energy Fuels Inc. (UUUU) - Energy Fuels has been the leading U.S. producer of natural uranium concentrate, accounting for two-thirds of all uranium produced in the U.S. since 2017 [3]. - The White Mesa Mill in Utah is the only fully licensed and operating conventional uranium processing facility in the U.S., with plans to establish it as a critical minerals hub [4]. - The acquisition of Base Resources Limited in October 2024 provided access to the Toliara Mineral Sand Project, enhancing UUUU's potential in titanium and zirconium minerals alongside rare earth elements (REEs) [5]. - UUUU's efforts to grow its REE business are seen as risky due to China's market dominance, but the company has the expertise and assets to compete [6]. - The company is currently producing from three uranium mines, with expected ore production for 2025 between 730,000 and 1,170,000 pounds of contained uranium, and anticipates uranium contract sales of 200,000 to 300,000 pounds in 2025 [7]. - Energy Fuels has a debt-free balance sheet and aims to ramp up uranium production, with a potential to produce 6 million pounds of uranium annually [8]. - In 2024, UUUU reported revenues of $78 million, a 106% year-over-year increase, primarily due to contributions from Heavy Mineral Sands, while uranium revenues rose by 9% [9]. - The company reported a loss of 28 cents per share in 2024, wider than the 19 cents loss in 2023, continuing a trend of losses since its NYSE listing in December 2013 [9]. Group 2: Cameco Corporation (CCJ) - Cameco accounted for 16% of global uranium production in 2024, covering the entire nuclear fuel cycle from exploration to fuel services [10]. - CCJ's 2024 revenues increased by 21% year-over-year to $2.2 billion (CAD $3.14 billion), driven by higher sales volumes and improved average realized prices [11]. - Adjusted earnings per share for CCJ were 47 cents (CAD 0.67), down 24% year-over-year due to purchase accounting impacts from the Westinghouse acquisition [11]. - The company 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 [12]. - Production at Inkai was temporarily paused due to regulatory delays, and future production plans remain uncertain, compounded by a change in Kazakhstan's Mineral Extraction Tax for uranium [13]. - Cameco's total debt to total capital ratio was 0.17 as of December 31, 2024, lower than the industry average of 0.29, indicating financial strength [14]. - The company is taking proactive measures against potential U.S. tariffs on Canadian energy products, which could include uranium, and does not expect a material effect on its 2025 results [15]. Group 3: Comparative Analysis - Year-to-date price performances for both companies have been poor, with UUUU shares declining by 29% and CCJ shares falling by 20.4% [20]. - UUUU is trading at a forward price-to-sales multiple of 7.63, below its three-year median of 15.75, while CCJ's forward sales multiple is 6.97, above its median of 7.24 [22]. - Revenue estimates for UUUU suggest a 7.5% year-over-year drop in 2025, with a projected loss of 21 cents per share, while estimates for 2026 indicate a potential revenue surge of 149% and the first expected profits [16][18]. - For CCJ, the 2025 revenue estimates imply an 11.2% growth, with earnings per share expected to increase by 114.3% [18]. - Overall, CCJ appears more attractive from a valuation standpoint and has better price performance, with upwardly revised estimates instilling confidence [24].