Centrus Energy Hit by Weak Uranium Sales: Recovery Ahead?

Core Insights - Centrus Energy (LEU) experienced a challenging second quarter in 2025, with a significant decline in its Low-Enriched Uranium (LEU) segment due to the absence of uranium sales, leading to an overall revenue drop of 18% [1][2][10] Group 1: Financial Performance - The LEU segment saw a 26% decrease in revenues and a 27% decline in sales volumes of Separative Work Units (SWU), despite a 24% increase in SWU prices, which was not enough to compensate for the volume shortfall [1][2] - In contrast, the first quarter of 2025 had shown strong performance for Centrus Energy, with LEU revenues increasing by 117% to $51.3 million, driven by a 46% rise in SWU prices and a 49% increase in sales volumes [3] - For the full year of 2024, Centrus Energy reported a total revenue increase of 30% to $349.9 million, with uranium revenues rising by 70% and SWU revenues by 19% [3] Group 2: Order Backlog and Future Prospects - As of June 30, 2025, Centrus Energy reported a backlog of $3.6 billion extending through 2040, with approximately $2.7 billion related to the LEU segment, indicating strong future revenue potential from medium and long-term contracts [4][10] - The backlog includes about $2.1 billion in contingent LEU sales commitments, reflecting a solid order pipeline despite current challenges [4] Group 3: Market Comparison - Peer company Cameco Corporation (CCJ) performed better in the second quarter, with total revenues increasing by 47% year over year to $634 million, and uranium revenues also rising by 47% to $510 million [5][6] - Cameco sold 8.7 million pounds of uranium, a 40% increase compared to the same quarter in 2024, despite a 17% decline in the average U.S. dollar spot price for uranium [6] Group 4: Stock Performance and Valuation - Centrus Energy's stock has surged by 167.6% in 2025, significantly outperforming the industry growth of 3.2%, the Basic Materials sector's rise of 14.7%, and the S&P 500's gain of 9.6% [9][10] - The company is currently trading at a forward 12-month price/sales multiple of 6.90X, which is a substantial premium compared to the industry's 2.74X [11] Group 5: Earnings Estimates - The Zacks Consensus Estimate for Centrus Energy's 2025 earnings is $4.24 per share, reflecting a year-over-year decline of 5.15%, with a further decline projected for 2026 to $3.36 per share, indicating a 20.8% decrease [12]