Centrus Stock Declines 10% on TENEX Update: What Does it Mean for Investors?

Zacks11-21 02:14

Shares of Centrus Energy Corp. LEU fell 10% yesterday after it announced that its main supplier TENEX’s export license has been rescinded as Russia has banned the export of low-enriched uranium to the...

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LEU fell 10% yesterday after it announced that its main supplier TENEX’s export license has been rescinded as Russia has banned the export of low-enriched uranium to the...</p>\n\n<a href=\"https://finance.yahoo.com/news/centrus-stock-declines-10-tenex-181400756.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Centrus Stock Declines 10% on TENEX Update: What Does it Mean for Investors?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCentrus Stock Declines 10% on TENEX Update: What Does it Mean for Investors?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-21 02:14 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/centrus-stock-declines-10-tenex-181400756.html><strong>Zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Shares of Centrus Energy Corp. LEU fell 10% yesterday after it announced that its main supplier TENEX’s export license has been rescinded as Russia has banned the export of low-enriched uranium to the...</p>\n\n<a href=\"https://finance.yahoo.com/news/centrus-stock-declines-10-tenex-181400756.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4211","symbol_name":"区域性银行","start_time":0,"source_url":"https://finance.yahoo.com/news/centrus-stock-declines-10-tenex-181400756.html","article_id":"2485127874","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/Ev_tIU5ISpaQ5VhHtkljDQ--~B/aD00MDA7dz02MzU7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/zacks.com/23c511afca431213fbe7b29620c075b2"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485127874","pubTimestamp":1732126440,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"The Centrus Energy stock closed at $68.50 yesterday, falling below its 50-day simple moving average  of $70.73, signaling a potential downtrend. The 50-day SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.With this recent setback, Centrus Energy has experienced a 27.5% drop in its stock price over the past month compared with the industry’s decline of 9.4%. The broader Zacks Basic Materials sector has declined 6.1%, while the S&P 500 has grown 1.1% during the same period.Meanwhile, Centrus Energy’s peers Energy Fuels UUUU, Denison Mine Corp DNN and Uranium Energy UEC have fared better, gaining 4.2%, 3.5% and 2%, respectively, over the past month.Cancellation of TENEX’s License Puts LEU’s Results at Risk. Now that Russia has retaliated by imposing restrictions on exports of enriched uranium to the United States, it exacerbates Centrus Energy’s woes. Russia has clarified that exemptions will be made for deliveries under one-of","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4211":"区域性银行","BK4563":"昨日强势股","DNN":"丹尼森矿业","ISBC":"投资者银行","LEU":"Centrus Energy Corp.","UEC":"Uranium Energy Corp","BK4156":"煤与消费用燃料","UUUU":"Energy Fuels Inc"},"translate_title":"TENEX更新后Centrus股价下跌10%：这对投资者意味着什么？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DNN":1,"ISBC":1,"LEU":1,"UUUU":1,"UEC":0.9},"content_text":"Shares of Centrus Energy Corp. LEU fell 10% yesterday after it announced that its main supplier TENEX’s export license has been rescinded as Russia has banned the export of low-enriched uranium to the United States or U.S.-registered entities. Per the current mandate, TENEX has to obtain a specific export license to ship low-enriched uranium to Centrus. If it fails, Centrus may face challenges in fulfilling its delivery commitments to customers, which could affect its results.\nThe Centrus Energy stock closed at $68.50 yesterday, falling below its 50-day simple moving average (SMA) of $70.73, signaling a potential downtrend. The 50-day SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.\nLEU Trades Below 50-Day SMA\nImage Source: Zacks Investment Research\nWith this recent setback, Centrus Energy has experienced a 27.5% drop in its stock price over the past month compared with the industry’s decline of 9.4%. The broader Zacks Basic Materials sector has declined 6.1%, while the S&P 500 has grown 1.1% during the same period.\nMeanwhile, Centrus Energy’s peers Energy Fuels UUUU, Denison Mine Corp DNN and Uranium Energy UEC have fared better, gaining 4.2%, 3.5% and 2%, respectively, over the past month.\nLEU's 1-Month Price Performance\nImage Source: Zacks Investment Research\nDoes LEU’s price decline represent a buying opportunity? Or are there enough near-term concerns to give the stock a miss at the moment? Let us delve deeper.\nCancellation of TENEX’s License Puts LEU’s Results at Risk\nUnder the 2011 TENEX supply contract, Centrus Energy purchases the separative work units (SWU) contained in the low-enriched uranium received from TENEX. Centrus Energy delivers natural uranium hexafluoride to TENEX for the LEU’s uranium component. This is subject to quotas and other restrictions applicable to commercial Russian low-enriched uranium. \nThe United States had imposed a ban on Russian uranium imports earlier this year. However, waivers may be granted to allow the import of limited amounts of Russian-origin LEU under certain circumstances until Jan. 1, 2028. Centrus Energy had received such a waiver from the U.S. Department of Energy (DOE) in July, allowing it to import low-enriched uranium from TENEX for delivery to U.S. customers in 2024 and 2025.\nOn June 7, 2024, Centrus Energy filed a second waiver request application to allow for the import of low-enriched uranium from Russia for processing and re-exporting to the company's foreign customers. It is currently awaiting DOE's approval. LEU plans to file a third waiver request application to allow for imports for its deliveries in 2026 and 2027.\nNow that Russia has retaliated by imposing restrictions on exports of enriched uranium to the United States, it exacerbates Centrus Energy’s woes. Russia has clarified that exemptions will be made for deliveries under one-off licenses issued by the Russian Federal Service for Technical and Export Control. \nTENEX’s current license to export low-enriched uranium to the United States has thus been revoked. It is now required to obtain a specific export license from the Russian authorities to meet its remaining shipment commitments of low-enriched uranium to Centrus Energy. While TENEX indicated that it would proceed to do so, there is no guarantee whether these licenses will be granted. In case it receives the approval, it is unclear whether it will be issued in proper time to ensure delivery to Centrus Energy.\nCentrus Energy had stated that through 2027, more than half of the low-enriched uranium that it expected to deliver to customers would be sourced under the TENEX Supply Contract. While the company has other sources, they cannot replace the TENEX supply. Thus, if TENEX cannot secure the approval, this loss in supply would hinder Centrus’ ability to fulfill its delivery commitments, and materially impact its results and competitive position. The company might be forced to buy the enriched uranium in the spot market, which could further pressure margins.\nConsidering that Centrus Energy does not mine uranium, this dependence on suppliers like TENEX to meet customer demand creates a substantial vulnerability.\nLEU Reports Weaker-Than-Expected Q3 Earnings\nCentrus Energy reported a loss of 30 cents per share in the third quarter of 2024, falling way short of the Zacks Consensus Estimate of earnings of 18 cents due to lower margins. LEU reported earnings per share of 52 cents in the third quarter of 2023.\nRevenues were $57.7 million for the quarter, surpassing the Zacks Consensus Estimate of $47 million. This compares with year-ago revenues of $51.3 million. \nGross profit declined 21% to $8.9 million in the third quarter as increased gross profit in the Technical Solutions segment was offset by lower gross profit in the LEU segment. Gross profit in the LEU segment was lower due to the decrease in sales volume, partially offset by the composition of contracts in the current quarter, which included higher-priced legacy contracts. Centrus Energy’s gross margin contracted 660 basis points year over year to 15.4%.\nEstimate Revision Trend of LEU\nEarnings estimates for Centrus Energy for 2024 have moved down 21.6% to $2.40 over the past 60 days and the same for 2025 has declined 5.7% to $2.83. The negative estimate revision depicts bearish sentiments for the stock.\nImage Source: Zacks Investment Research\n \nDisparity Between LEU's Revenue & Earnings Growth\nThe charts below show the trend in Centrus Energy’s revenues and earnings over the past three years. While LEU has seen a 3-year CAGR of 9% in its top line, the bottom line grew at a slower pace, seeing a CAGR of 4.2%.\nLEU’s Revenue Trend in Past 3 Years\nImage Source: Zacks Investment Research\n \nLEU’s Earnings Trend in Past 3 Years\nImage Source: Zacks Investment Research\n \nLEU’s Valuation Looks Stretched\nCentrus Energy’s stock is trading at a premium to the industry and broader market. Its forward 12-month P/E ratio of 24.67 is higher than the industry average of 20.23. It is also higher than the Basic Materials Sector’s 14.6 and S&P 500’s 22.13.\nImage Source: Zacks Investment Research\nLEU’s Value Score of F reinforces concerns around its overvaluation, signaling that its current price may not align with underlying fundamentals.\nLEU Banks on Long-Term Demand Prospects for HALEU\nCentrus Energy is pioneering the development of a high-performance nuclear fuel component called High-Assay, Low-Enriched Uranium (HALEU), which is expected to be needed in the next few years to power both existing reactors and a new generation of advanced reactors to meet the world’s growing need for carbon-free electricity. \nUnder a contract with the DOE, Centrus is deploying a cascade of AC100M centrifuges at the American Centrifuge Plant in Piketon, OH — the first facility licensed by the U.S. Nuclear Regulatory Commission for HALEU production. In October, Centrus Energy announced that its subsidiary, American Centrifuge Operating, LLC, was selected by the DOE as an awardee for HALEU production and HALEU deconversion contracts. \nPer the World Nuclear Association, as of end of September 2024, there were 67 reactors under construction worldwide, approximately one-half of which are in China. The United States, with more than 90 operating reactors, is the world’s largest market for nuclear fuel.\nBetter to Avoid Centrus Energy Stock for Now\nGiven Centrus Energy’s major reliance on TENEX for the supply of low-enriched uranium, the company was already at risk and dependent on waivers following the United States’ ban on imports from Russia. The cancellation of TENEX’s export license adds to its challenges. If TENEX fails to obtain the necessary approvals, this will severely impact LEU’s delivery commitments and, thereby, its results. Considering this uncertainty, coupled with the downward earnings estimate revisions and its premium valuation, it may be wise to hold off on investing in Centrus Energy at this time.\nLEU currently carries a Zacks Rank #5 (Strong Sell).\nYou can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\nDenison Mine Corp (DNN) : Free Stock Analysis Report\nEnergy Fuels Inc (UUUU) : Free Stock Analysis Report\nUranium Energy Corp. (UEC) : Free Stock Analysis Report\nCentrus Energy Corp. (LEU) : Free Stock Analysis Report\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485127874"}