energy fuels (UUUU – Free Report) has been one of the most searched stocks on Zacks.com lately. So, you should look at some of the facts that could affect the stock’s performance in the short term.
Over the past month, shares of this uranium and vanadium mine and developer are down 0% compared to a +6.8% change in the Zacks S&P 500 Composite. During that period, the Zacks Mining – Non Ferrous industry, which includes Energy Fuels, is up 24.7%. The crucial question now is: What could the future direction of the stock be?
While news releases or rumors of a material change in a company’s business prospects will usually “trend” the stock and result in an immediate price change, there are always some basic facts that ultimately drive the buy-and-hold decision.
Revisions to earnings estimates
Rather than focusing on anything else, at Zacks we prioritize assessing the change in a company’s earnings outlook. This is because we believe the fair value of its stock is determined by the present value of its future income streams.
Essentially, our analysis is based on how sell-side analysts who cover the stock revise their earnings estimates to reflect the latest business trends. As earnings estimates for a company increase, so does the fair value of its stock. And when a stock’s fair value is higher than its current market price, investors tend to buy the stock, causing its price to move higher. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Energy Fuels is expected to report a loss of $0.05 per share for the current quarter, a -150% year-over-year change. In the last 30 days, the Zacks consensus estimate has changed by -350%.
Consensus earnings estimate of -$0.34 for the current fiscal year indicates a change of -47.8% year-on-year. This estimate has changed by -59.4% in the last 30 days.
For the next fiscal year, the consensus earnings estimate of $0.45 shows a change of +232.4% from what Energy Fuels is expected to report a year ago. In the last month, the estimate has changed by -1000%.
Our proprietary stock ranking tool, the Zacks Rank, has a strong, third-party audited track record and provides a more meaningful picture of a stock’s near-term price action by effectively harnessing the power of earnings estimate revisions. Based on the size of the recent consensus estimate change and three other factors related to earnings estimates, Energy Fuels is rated Zack’s #3 rank (Hold).
The chart below shows the development of the company’s 12-month consensus EPS estimate:
12 Month EPS
Sales Growth Forecast
While a company’s earnings growth is arguably the best indicator of its financial health, not much happens if it can’t grow its revenue. It’s almost impossible for a company to grow its profits without increasing its revenue over long periods of time. Therefore, knowing a company’s potential revenue growth is crucial.
For Energy Fuels, the consensus revenue estimate for the current quarter of $1 million indicates a change of -39.8% year-on-year. For the current and next fiscal years, estimates of $14.55 million and $70.25 million indicate changes of +357% and +382.8%, respectively.
Latest reported results and surprise history
Energy Fuels reported revenue of $2.93 million for the most recent quarter, a +306.9% year-over-year change. EPS of -$0.06 for the same period compared to -$0.05 a year ago.
Compared to the Zacks Consensus estimate of $1 million, reported earnings represent a surprise of +193.3%. The EPS surprise was -100%.
In the past four quarters, the company beat EPS estimates just once. The company beat consensus estimates for sales just once during that period.
No investment decision can be efficient without considering a stock’s valuation. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key factor in future stock price performance.
Comparing the current value of a company’s valuation multiples, such as B. Price to Earnings (P/E), Price to Sales (P/S), and Price to Cash Flow (P/CF), with its own historical values help determine whether the stock is Fairly Valued, Overvalued or Undervalued while making the comparison of the company relative to its peers based on these parameters gives a good indication of how reasonable the stock price is.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which assesses both traditional and unconventional valuation metrics) organizes stocks into five groups from A to F (A is better than B; B is better than C; and so on), making it helpful in determining whether a stock is overvalued, correctly valued, or temporarily undervalued.
Energy Fuels is rated F on this front, indicating it is trading at a premium to its peers. Click here to view the values of some of the assessment metrics that led to this grade.
The facts discussed here and much other information on Zacks.com could help determine whether or not the Energy Fuels market is worth paying attention to. However, its No. 3 Zacks rank suggests that it could move in line with the broader market in the near future.