- Wondering if Centrus Energy at around US$179 per share is still offering value or if most of the opportunity is already reflected in the price? This article focuses squarely on what the current valuation is telling you.
- The stock has climbed 3.7% over the past week, while the share price is down 12.8% over the last month and down 34.2% year to date, with a much longer term return of 58.3% over the past year and a very large gain over five years of around seven times.
- Recent headlines around Centrus Energy have centered on its role in the nuclear fuel supply chain and investor interest in nuclear related infrastructure, which helps explain some of the share price volatility. These developments have kept the stock in focus for investors assessing how changing sentiment may feed into expectations for the business.
- Centrus Energy currently has a valuation score of 2 out of 6, and the sections that follow will break this down using methods like DCF, multiples and peer comparisons, before closing with a broader way to think about what valuation really means for your investment case.
Centrus Energy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Centrus Energy Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s value. It is essentially asking what those future dollars are worth in today’s terms.
For Centrus Energy, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $38.5 million, and analyst inputs plus extrapolated figures point to free cash flow of $180.0 million by 2028, with further projections extending out to 2035. Beyond the explicit analyst period, Simply Wall St extrapolates the cash flows using a tapering growth profile to complete the forecast curve.
Putting these projections together, the DCF model arrives at an estimated intrinsic value of $330.76 per share. Compared with the current share price of about $179, this implies the stock is trading at a 45.8% discount to the model’s estimate. On this particular cash flow view, Centrus Energy stock appears to be trading below the model’s estimated intrinsic value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Centrus Energy is undervalued by 45.8%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: Centrus Energy Price vs Earnings
P/E is a common way to look at valuation for profitable companies because it connects what you pay for each share with the earnings that support that share. It gives you a quick sense of how many dollars of price you are paying for each dollar of current earnings.
What counts as a “normal” P/E will usually reflect how much earnings growth investors expect and how much risk they see in those earnings. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk is often associated with a lower P/E.
Centrus Energy currently trades on a P/E of 58.23x, compared with the Oil and Gas industry average of 14.61x and a peer average of 11.15x. Simply Wall St’s Fair Ratio framework estimates what a more tailored P/E could look like for this stock at 10.85x, based on factors such as earnings growth profile, profit margins, industry, market cap and specific risks. This company specific Fair Ratio can be more informative than a basic peer or industry comparison because it adjusts for those fundamental characteristics rather than treating all companies as alike. Against this yardstick, Centrus Energy’s current P/E of 58.23x sits materially above the 10.85x Fair Ratio, which points to the stock trading on a richer multiple than that Fair Ratio implies.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Centrus Energy Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as your own story for Centrus Energy that links what you believe about its role in the nuclear fuel supply chain to a set of revenue, earnings and margin forecasts, and then to a Fair Value that you can easily compare with the current price.
On Simply Wall St’s Community page, Narratives are a simple tool that let you set those assumptions in plain language, see the resulting Fair Value right next to today’s market price to help with timing decisions, and then watch that view update automatically as new earnings, news or contracts are added to the model.
For Centrus Energy, one investor Narrative might focus on its exclusive authorization to enrich uranium for the U.S. government and a Fair Value around US$609.90, while another might focus on competition, contract risk and a Fair Value closer to US$146.62. Putting these side by side shows how different stories about the same company translate into very different estimates of what the stock may be worth.
For Centrus Energy however we will make it really easy for you with previews of two leading Centrus Energy Narratives:
Fair Value: US$269.38
Implied discount to this Fair Value: about 33.4% below the narrative estimate based on the recent price.
Revenue growth assumption: revenue is expected to decline about 1.1% a year.
- Analysts behind this view see Centrus using its position in enrichment and HALEU to support long term growth, but they are also baking in some pressure on revenue and margins over the next few years.
- The narrative leans on a large contract backlog, a strong cash position of about US$833m, and access to DOE funding to support capacity build out and future earnings.
- To align with this Fair Value, you would need to be comfortable with a high future P/E of roughly 126.6x applied to 2029 earnings and with ongoing share issuance.
Fair Value: US$146.62
Implied premium to this Fair Value: about 22.3% above the narrative estimate based on the recent price.
Revenue growth assumption: revenue is expected to decline about 17.4% a year.
- This narrative puts more weight on execution risk, customer concentration, and the possibility that new enrichment rivals or alternative technologies eat into Centrus' long term returns.
- It assumes a sharper revenue contraction ahead, while still requiring a high future P/E of about 92.6x to support the bearish Fair Value. This leaves less room for disappointment if earnings do not keep pace.
- Even under this cautious view, the analysts are factoring in margin support from potential convergence toward broader Oil and Gas profitability, alongside continued growth in the share count.
If you want to see how other investors are framing Centrus Energy across different Bull, Bear and consensus setups, and how those stories translate to Fair Values next to today’s price, See what the community is saying about Centrus Energy.
Do you think there's more to the story for Centrus Energy? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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