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Cameco (NYSE:CCJ) reported Q1 results ahead of the open Thursday, beating Street estimates and talking at length about improving market fundamentals. However, with negligeable earnings and no new contracts, investors are left waiting for value to materialize:
- Earnings - the Company generated 4c in adjusted earnings per share during the quarter, against Street expectations for a 1c loss.
- Contracting - management has not signed any additional contracts since Q4 results were released, indicating that "we will continue to exercise strategic patience in our contracting activity."
- Supply - the Company's JV with Kazatomprom has faced transport challenges, given exports are reliant on Russian rail and ports, which have suffered from cancelation of insurance coverage.
- Guide - the Company is sticking with production plans, despite improved pricing in 2022, indicating, "we will not front-run demand with supply."
Cameco (CCJ) remains well positioned, as a scale producer of uranium (OTCPK:SRUUF) in North America. The demand picture is improving as Canada, Europe and even California discuss plans to extend or increase nuclear power generation. Meanwhile, the supply picture is also improving, as war in Ukraine impacts supply and enrichment capacity.
The best strategy may be to wait for the market to come to Cameco (CCJ), and that is exactly what management is doing. However, amidst peak supply uncertainty, it's a bit surprising to find management has not signed any contracts during the quarter. Unlike most energy subsectors, uranium names (URA) are not making very much money in the current environment, leaving investors waiting for tangible value to materialize.