Cameco (CCJ) Stock: Uranium Play Climbs Despite Earnings Miss – Time to Buy?

TLDR

• Cameco shares climbed 1.6% to $123.86 on Friday, with trading volume 24% below average at 3.39 million shares
• Analysts maintain a “Buy” rating with an average price target of $121.68, though current trading exceeds this target
• The company missed Q3 estimates with $0.05 EPS versus $0.22 expected and revenue down 14.7% year-over-year
• Cameco doubled its annual dividend from $0.12 to $0.24, representing a 27% yield at current prices
• Wall Street remains split with two Strong Buy, 12 Buy, and two Hold ratings from 16 analysts covering the stock

Cameco shares moved higher on Friday, closing at $123.86 after gaining 1.6% during the trading session. The stock reached an intraday high of $124.11 before settling just below that mark.

Cameco Corporation, CCJ

Trading volume told a different story. Only 3.39 million shares changed hands, roughly 24% below the average daily volume of 4.45 million shares. The lighter trading activity came as the stock pushed higher from Thursday’s close of $121.87.

The price action comes weeks after the company reported disappointing third-quarter results. Cameco posted earnings per share of $0.05, missing analyst expectations of $0.22 by a wide margin. Revenue came in at $313.74 million, falling short of the $531.72 million consensus estimate.

Year-over-year comparisons weren’t pretty either. Revenue dropped 14.7% compared to the same quarter last year. The company posted a loss of $0.01 per share in the prior-year period, making the positive $0.05 EPS a relative improvement despite missing current estimates.

The company now trades at a lofty valuation. With a market cap of $53.94 billion and a P/E ratio of 144.02, investors are paying a premium. The stock sits well above its 50-day moving average of $95.51 and its 200-day moving average of $86.90.

Analyst Ratings Paint Mixed Picture

Wall Street analysts maintain a generally positive outlook. Two analysts rate the stock a Strong Buy, while 12 have Buy ratings. Two analysts issued Hold ratings. The average price target stands at $121.68, which actually sits below Friday’s closing price.

Recent analyst moves show continued support. Raymond James reaffirmed an “outperform” rating on January 14th. Goldman Sachs raised its price target from $95 to $109 back in October, maintaining a Buy rating.

Not everyone shares the enthusiasm. Wall Street Zen downgraded shares from Buy to Hold in early November. Weiss Ratings maintained a “hold (c-)” rating in late December. GLJ Research set a more conservative price target of $99.74 while keeping a Buy rating.

The company’s balance sheet shows strength in some areas. Cameco maintains a debt-to-equity ratio of 0.15, indicating low leverage. The quick ratio of 1.85 and current ratio of 2.99 suggest solid liquidity.

Dividend Doubles Despite Revenue Decline

Cameco made a surprising move in December. The company doubled its annual dividend from $0.12 to $0.24 per share. The dividend was paid on December 16th to shareholders of record as of December 1st.

The payout ratio sits at 19.77%, leaving plenty of room for future increases. At Friday’s closing price, the dividend represents a 27% yield, though that calculation appears to use annualized figures.

Institutional investors continue to adjust their positions. Financial Consulate Inc. initiated a new stake worth $25,000 in the third quarter. Nisa Investment Advisors and Founders Capital Management also established positions in the fourth quarter.

Trust Co. of Vermont made a bigger move. The firm increased its position by 1,029.4% in the second quarter, bringing its total to 384 shares valued at $29,000. Institutional investors now own 70.21% of the company’s outstanding shares.

Analysts project full-year earnings of $1.27 per share. The company reported a net margin of 15.24% and return on equity of 8.58% in the most recent quarter. The beta of 1.01 suggests the stock moves roughly in line with the broader market.

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