Energy Fuels UUUU has declined 27.7% in the past 12 months against the non-ferrous mining industry’s 16.2% growth. The Zacks Basic Materials sector has slipped 1%, while the S&P 500 has risen 24.7% in the same timeframe.
The UUUU stock’s decline aligns with the 30% decrease in uranium prices seen over the past year. Energy Fuels’ lowered production outlook due to the suspension of transportation from Pinyon has weighed on the stock’s performance as well.
Meanwhile, peers Cameco CCJ and Centrus Energy LEU have gained 11.8% and 43.6%, respectively. Denison Mines Corp. DNN has dipped 1.6% in the past 12 months, but it has fared better than Energy Fuels.
UUUU Stock’s 1-Year Performance Vs Industry, Sector & S&P 500
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The UUUU stock is currently trading below its 200-day and 50-day moving averages, suggesting a bearish trend.
UUUU Shares Trade Below 50-Day & 200-Day SMAs
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Given the significant pullback in UUUU shares, investors might be tempted to snap up the stock. Let us understand the company’s strengths and weaknesses to better analyze how to play the stock.
Energy Fuels Lowers 2024 Outlook on Pinyon Concerns
UUUU has paused ore shipments from its Pinyon mine in Arizona following concerns raised by the Navajo Nation about transporting radioactive materials through their lands. Mining has continued at Pinyon, with the mined ore stockpiled at the site. Factoring this setback, Energy Fuels expects to produce 150,000-200,000 pounds of finished uranium in 2024, lower than the prior stated 150,000-500,000 pounds.
With no contract sales scheduled for the fourth quarter of 2024, UUUU stated that it would look for opportunities to sell uranium on the spot market to take advantage of any price increase. However, considering the weakness in prices, we do not expect any sales to have taken place in the fourth quarter.
Base Resources to Boost REE Production: In October 2024, Energy Fuels acquired Base Resources Limited, gaining access to its Toliara Mineral Sand Project. This supports UUUU’s goal to become a leading global producer of rare earth elements (REE), which are essential in various clean energy technologies. This move will also strengthen its potential to become a major producer of titanium and zirconium minerals.
The Toliara project complements Energy Fuels’ Bahia Mineral Sand Project in Brazil and 49% stake in the Donald Mineral Sand Project in Australia. With this move, UUUU ensures a long-term supply of monazite that can be processed to produce advanced REE materials at its White Mesa Mill, a cost-effective and capital-efficient strategy. In December 2024, the Madagascar government lifted the suspension on the Toliara project (which had been in place since November 2019), and UUUU can now develop this project.
Per the International Energy Agency, REE may see three to seven times higher demand in 2040 from the current levels. Due to China’s dominance in the REE sector, there has been an increasing focus in the United States to develop REE supply chains independent of China.
RadTran to Capitalize on Isotope Shortage: Targeted alpha therapy is showing great promise in clinical trials for cancer treatment. It requires certain isotopes (Ra-226 and Ra-228) that are scarce in supply. To address this issue, Energy Fuels recently acquired RadTran LLC to use its know-how to recover these isotopes from its process streams at the White Mesa Mill.
UUUU Continues to Focus on Boosting Uranium Capacity
Energy Fuels has four long-term contracts with major U.S. nuclear utilities that require deliveries of base quantities of 2.8 million pounds of uranium from 2025 to 2030.
The company is preparing two additional mines in Colorado and Wyoming (Whirlwind and Nichols Ranch), which could increase uranium production to a run rate of more than two million pounds per year as early as 2026. UUUU is advancing several other large-scale U.S. mine projects to raise the capacity to 5 million pounds annually to bet on the robust uranium market conditions.
Energy Fuels Boasts Debt-Free Balance Sheet
As of Sept. 30, 2024, UUUU had $183.2 million of working capital, including $47.46 million in cash and cash equivalents, $101.15 million in marketable securities (interest-bearing securities and uranium stocks), $35.91 million of inventory, and no debt. This is commendable compared with the industry’s debt-to-capital ratio of 28%.
UUUU Poised to Deliver Profits in 2025
The Zacks Consensus Estimate for Energy Fuel’s 2024 and 2025 earnings have been unchanged over the past 60 days.
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The estimate for 2024 is pegged at a loss of 10 cents, suggesting a slight improvement from the loss of 12 cents incurred in 2023. The expectation of lower sales amid a weak backdrop for uranium prices will likely lead to a full-year loss for UUUU in 2024.
However, the picture for the next year holds promise. Earnings estimates for 2025 are pegged at 7 cents, which indicate that analysts expect the company to deliver its first year of profit since it started trading on the NYSE in December 2013.
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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Average Target Price for Energy Fuels Suggests Solid Upside
Based on short-term price targets offered by four analysts, the average price target is $8.54 per share. The average suggests a 64% upside from Friday’s closing price.
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UUUU Offers Lofty Stock Valuation
Energy Fuels is currently trading at a forward sales multiple of 6.68, well above the industry average of 2.78.
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The company’s Value Score of F suggests that the stock is not so cheap and indicates a stretched valuation at this moment.
Should You Buy UUUU Stock Now?
Energy Fuels seems ready to deliver its first year of profit in 2025. Backed by its debt-free balance sheet, the company is advancing with its growth plans to capitalize on the expected surge in uranium and REE demand. The go-ahead signal for Toliara removes a major stumbling block. Those who already own the stock may stay invested, given UUUU’s solid long-term prospects in the uranium and REE markets.
Considering its premium valuation and shipment issues at Pinyon, new investors should monitor Energy Fuels’ developments for a more appropriate entry point. The stock’s Zacks Rank #3 (Hold) supports our thesis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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