Update: MT Newswires Canada Overnight Stocks To Watch: Allied Gold; Denison; Kolibri; Lundin Gold; Newmont; Osisko Development; South Bow

Cameco Corporation CCJ is scheduled to report third-quarter 2024 results on Nov. 7, before the opening bell.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The Zacks Consensus Estimate for CCJ’s earnings for the third quarter is pegged at 26 cents per share, which indicates an 8.3% improvement from the prior-year quarter’s reported figure. Over the past 60 days, the estimate has moved up 8.3%.

The consensus estimate for Cameco’s third-quarter revenues is $551 million, indicating 28.6% growth from the year-ago quarter's actual.

Cameco’s Earnings Surprise History

Over the trailing four quarters, Cameco’s earnings missed the Zacks Consensus Estimate thrice and surpassed the same once. CCJ has an average trailing four-quarter negative earnings surprise of 11.1%. The trend is shown in the chart below.

What the Zacks Model Unveils for Cameco

Our proven model does not conclusively predict an earnings beat for Cameco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Cameco is -47.06%.

Zacks Rank: CCJ currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Have Shaped CCJ’s Q3 Performance

Uranium prices decreased 14% since the beginning of 2024 as concerns around global supply have eased. Despite the dip, uranium prices averaged $81.58 per pound for the third quarter of 2024 and were 30% higher year over year. Prices received a boost near the end of the third quarter from China’s move to increase sustainable energy development with nuclear energy. China is building 22 of the 58 global reactors. Interest in nuclear power also gained momentum in the United States.

CCJ has a 69.8% stake in the McArthur River mine and 83% in the Key Lake mill — the world's largest high-grade uranium mine and mill. Cameco has a 54.5% interest in Cigar Lake, which is the world’s highest-grade uranium mine.

In 2024, the McArthur River/Key Lake and Cigar Lake are expected to produce 18 million pounds each. Of the total production, Cameco’s share is at 22.4 million pounds of uranium, higher than the 17.6 million pounds in 2023.

CCJ plans to sell 32-34 million pounds of uranium in 2024, whereas it sold 32 million pounds in 2023. Having sold 13.5 million pounds in the first half of 2024, Cameco has to sell 18.5-20.5 million pounds of uranium in the second half of 2024, suggesting a rise from the 16.8 million pounds sold in the second half of 2023.

Cameco also owns a 40% stake in the Inkai mine, which has been facing procurement and supply-chain issues, mainly related to sulfuric acid deliveries. Transportation challenges, construction delays and inflationary production costs are other headwinds.

Fuel services production for 2024 is expected to be 13.5-14.5 million kgU, suggesting a rise from the 13.3 million kgU reported in 2023. Sales deliveries are expected to reach 12-13 million kgU in 2024, whereas it reported 12 million kgU in 2023.

These anticipated improvements in production and sales for uranium and fuel services for the full year are likely to have positively influenced CCJ’s third-quarter performance. However, routine maintenance at Cigar Lake, McArthur River and Key Lake in the third quarter is likely to have somewhat impacted production figures. Despite this, we expect uranium production in the third quarter of 2024 to be more than the 3 million pounds produced in the third quarter of 2023. Uranium sales are also likely to have been higher than the 7 million pounds sold in the year-ago quarter, as Cameco is likely to have capitalized on the higher uranium prices through the quarter.

In the third quarter of 2024, fuel services production and sales are expected to surpass 2 million kgU and 2.1 million kgU, respectively, in the year-ago quarter.

Higher sales volumes in both uranium and fuel services segments, coupled with increased uranium prices, are expected to have benefited Cameco’s top-line performance.

Meanwhile, the average unit cost of production at McArthur River/Key Lake is expected to have been higher in the quarter as it ramps up production. The average unit cost of sales in the fuel services segment is likely to have been elevated than the prior-year quarter’s actual due to the lower production expectations at the Port Hope conversion facility. CCJ will continue to incur care and maintenance costs for the ongoing curtailment of its tier-two assets, which are expected between $50 million and $60 million.

Cameco has been progressing to lower administration, exploration and operating costs, and capital expenditure. This will help offset the impacts of elevated costs on CCJ’s earnings.

In November 2023, CCJ acquired a 49% interest in Westinghouse Electric Company. Westinghouse is expected to incur a net loss of $170-$230 million in 2024 due to the impacts of the purchase accounting, which requires the revaluating of Westinghouse’s inventory and other assets at the time of acquisition, and the expensing of some non-operating acquisition-related transition costs. Of the expected net loss for Westinghouse in 2024, $170 million has already been incurred in the first half. Due to normal variability in the timing of its customer requirements, and delivery and outage schedules, we expect the Westinghouse segment to have seen a stronger performance in the third quarter of 2024.

CCJ’s share of adjusted EBITDA from Westinghouse is expected between $445 million and $510 million in 2024. Of this, $197 million of EBITDA was realized in the first half of 2024 and the major part ($248-$313 million) remains to be realized in the second half of 2024. We, thus, expect the third-quarter contribution from Westinghouse to have been higher.

CCJ’s Price Performance & Valuation

Cameco shares have appreciated 33.7% in the past three months, outpacing the industry’s return of 7%. In comparison, the Zacks Basic Materials sector and the S&P 500 have gained 2.7% and 9.5%, respectively.

Meanwhile, the company’s peer Energy Fuels UUUU and Denison Mine Corp. DNN have gained 21.8% and 31.8%, respectively.

The Cameco stock is trading at a forward price-to-sales ratio of 9.36 compared with the industry’s 1.21. It is also above its five-year median of 5.56.

The company is, however, cheaper than peer Uranium Energy’s UEC price-to-sales ratio of 33.27.

Investment Thesis on Cameco

Geopolitical events, energy security concerns and the global focus on the climate crisis amid rising low-carbon energy demand have created tailwinds for the nuclear power industry. Given CCJ’s low-cost and high-grade assets, and diversified portfolio spanning the nuclear fuel cycle, it is well-poised to capitalize on these trends. It is the second-largest uranium producer, accounting for 16% of 2023 global production. Supported by a strong balance sheet, Cameco is making investments to boost its capacity. For the next five years, the company has contracts for average annual deliveries of 29 million pounds of uranium per year. These offer CCJ a buffer against potential declines in uranium prices.

The ongoing procurement and supply-chain issues, and construction delays at Inkai are headwinds for Cameco. Also, changes to the Mineral Extraction Tax for uranium in Kazakhstan, which will take effect in 2025, will impact its earnings.

Should You Buy CCJ Stock Now?

Cameco is likely to deliver improved results in the third quarter, supported by higher sales volumes and uranium prices. Regardless of the earnings outcome, investors already owning CCJ shares should retain the stock in their portfolios to benefit from its solid long-term fundamentals. However, given CCJ’s premium valuation and ongoing challenges at Inkai, new investors can wait for a better entry point.

Zacks Investment Research

Idaho Strategic Resources IDR is expected to register year-over-year improvements in the top and bottom lines when it reports third-quarter 2024 results next week. This is expected to have been driven by the uptrend in gold prices throughout the quarter and higher production levels.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The Zacks Consensus Estimate for Idaho Strategics’ earnings for the third quarter is pegged at 21 cents per share, suggesting a substantial improvement from the 3 cents reported in the third quarter of 2023. The estimate has moved up 5% over the past 60 days.

The consensus estimate for IDR’s revenues is pegged at $7.40 million, indicating a 124% surge from the year-ago quarter's actual.

Idaho Strategic’s Earnings Surprise History

IDR’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters but missed in one. The company has a trailing four-quarter earnings surprise of 116.55%, on average. The trend is shown in the chart below.

What the Zacks Model Unveils for IDR Stock

Our proven model does not conclusively predict an earnings beat for Idaho Strategic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: IDR has an Earnings ESP of 0.00%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Have Shaped Idaho Strategic’s Q3 Performance

IDR has delivered solid results so far in 2024, with first-half revenues rising 82.8% and earnings surging 325% year over year. The company produced 6,019 ounces of gold in the first half of 2024, which marked a 55% jump from 3,877 ounces in the first half of 2023. This momentum is expected to have continued throughout the third quarter of 2024 as mining on the H-Vein progresses.

Gold prices averaged $2,491 per ounce in the third quarter, up 29% from the prior-year level. Throughout the quarter, gold prices have been fueled by increasing expectations of interest rate cuts and rising tensions in the Middle East. The Fed’s announcement of a 50-basis-point rate cut at the Sept. 17-Sept. 18 meeting lifted gold prices, which ended the quarter at above 2,600 per ounce.

Higher gold prices and production levels are expected to have boosted the company’s revenues in the third quarter.

However, drilling activity at the company’s Golden Chest Mine is expected to have increased exploration expenses in the quarter from the prior year- quarter. Meanwhile, increase in production is anticipated to have resulted in lower cash costs. Improved efficiencies are also expected to have benefitted IDR’s earnings in the third quarter.

IDR’s Price Performance & Valuation

Shares of Idaho Strategic have surged 220.9% in a year, way ahead of the industry's 48.4% growth. In comparison, the Zacks Basic Materials sector and the S&P 500 have rallied 15.8% and 39%, respectively, in the same period.

IDR’s Price Performance Against Industry & Broader Market

The company has also outscored major gold miners like Barrick Gold GOLD and Newmont’s NEM gains of 25.9% and 23.6%, respectively.

The IDR stock is currently trading at a forward sales multiple of 8.09, well above the industry average of 2.97.

Investment Thesis on Idaho Strategic

With a strong cash flow and low debt, IDR is well-equipped to invest in existing mines while exploring and developing gold and rare earth element (REE) prospects. It recently announced the discovery of Red Star Vein during a drill program at its Golden Chest mine, indicating growth potential.

Gold prices have gained 34% year to date and are currently at $2,780 per ounce, gaining on safe-haven demand amid uncertainty surrounding the U.S. election and rising tensions in the Middle East. Gold demand has been robust, driven by safe-haven investment, central bank purchases, and increasing use in sectors like energy and healthcare. The favorable environment for gold presents a promising outlook for IDR.

Demand for REEs is rising due to their critical role in clean energy technologies, and given China’s dominance in the market, the United States has heightened its focus on developing domestic REE capabilities. IDR is taking steps to capitalize on this opportunity.

Should You Buy IDR Stock Right Now?

Idaho Strategic is likely to deliver solid year-over-year improvement in revenues and earnings in the to-be-reported quarter, aided by higher gold prices and production, which could further boost the stock. IDR offers investors the stability of profitable gold production and the added benefit of diversification through its exposure to REE elements. Despite its expensive valuation, IDR is a great stock to add to one’s portfolio to benefit from the solid long-term fundamentals of the gold and REE markets. Idaho Strategic currently flaunts a Zacks Rank #1 and has a VGM Score of B.

Zacks Investment Research