Cameco Corporation's Strong Earnings Report: Market Multiples Improve

Company Profile

Cameco is one of the largest global providers of the uranium fuel needed to energise a clean-air world. The company's competitive position is based on the controlling ownership of the world’s largest high-grade reserves and low-cost operations. Utilities around the world rely on our nuclear fuel products to generate safe, reliable, carbon-free nuclear power. The company's shares trade on the Toronto and New York stock exchanges. Company's head office is in Saskatoon, Saskatchewan, Canada.


  • Cameco Corporation has achieved a remarkable 81% increase in YTD, primarily attributed to the surge in uranium prices and the rising demand for clean energy.
  • The company’s financial performance for the first 9 months of the year has been impressive, with a 2.5x increase in gross profit and a net margin of 16.1%.
  • Cameco remains optimistic and despite the anticipation of lower uranium production, the company has updated its revenue outlook. Investors can look forward to an estimated revenue growth of 45% in Q4 2023,along with a continued positive trend in earnings improvement.

An aerial view of Cameco's Cigar Lake uranium mine site innorthern Saskatchewan September 3, 2010. REUTERS/David Stobbe/File Photo Acquire Licensing Rights

This year's growth

Undoubtedly, this has been a remarkable year for Cameco Corporation (CCJ),the largest publicly traded Canadian uranium miner on US exchanges. The price of a stock has risen 81% year-to-date. This stellar performance can be attributed to the thriving nuclear energy sector, evident in the substantial surge in uranium prices to $73 per pound (/lb) in the latest trade, marking a 50% YTD increase due to growing demand for clean energy. This price surge is further exacerbated by uncertainties in uranium supply caused by the ongoing Russian-Ukrainian conflict and the coup in Niger. Russia, a major uranium processor, and Niger, with significant uranium reserves, contribute to these supply concerns.

Linear Chart YTD performance (CCJ), Source: MarketWatch

Uranium Price YTD, Source: Cameco Corporation

Cameco's recently released results for the first nine months (9M 2023) of the year continue to reflect the impact of rising uranium prices. However, given the stock's rapid increase so far this year, the question arises as to whether it still has room for growth.


The company's revenues have seen healthy year-on-year (YoY) growth of 30% in 9M 2023 and an even more impressive 48% in the third quarter (Q3 2023) due to the higher realized uranium prices. Despite an 11.8% increase in the cost of sales over the nine months, it was somewhat contained thanks to declining unit costs for uranium, resulting in a 2.5x increase in gross profit and a more than doubling of the gross margin from 12.5% in 9M 2022 to 24.6%. The margin improvement is even more striking for Q3 2023, reaching 26.4% (compared to 6.4%in Q3 2022).

Key financials, Source: Cameco Corporation

Improved gross profit has also positively impacted the net margin, which stands at 16.1% for 9M 2023 (compared to 7.8% in 9M 2022). Notably, the net margin for Q3 2023 is a robust 25.7%, marking a significant turnaround from the net loss experienced in Q3 2022.

Upgraded Outlook

Although the projected uranium production for 2023 has been lowered from 20.3 million pounds earlier in the year to 18.7 million pounds, this reduction is attributed to various factors. These include decreased productivity during the commencement of production at the new ore body within its Cigar Lake operation. Furthermore, it was also adversely affected by equipment reliability issues. Additionally, the production at the site of Key Lake mill faced uncertainties due to a range of factors, leading to supply chain challenges.

Despite reducing the expected uranium production volume, Cameco has upgraded its outlook for 2023. They expect higher revenues due to improved realised prices of $65.5/lb, up from the previous forecast of $61.7/lb. This upgrade is primarily driven by anticipated revenue growth in the uranium sector, responsible for mining and trading the commodity, while the outlook for fuel services remains unchanged.

2023 Financial Outlook, Source: Cameco Corporation

The updated revenue outlook for 2023 ranges between CAD 2,430 - 2,580 million, representing a 9% increase over the initial forecast and a 34.1% rise from 2022. For Q4 2023, a 45% revenue growth is expected based on these estimates.

Forward Earnings Estimate

To assess the stock's performance, it's important to consider profit figures. Assuming the net margin remains consistent with Q3 2023 due to sustained elevated uranium prices, the anticipated net profit margin for the entire year is projected to be 19%, an increase from the 16.1% net profit margin reported for the first nine months of 2023. This would result in the estimated net profit for the full year 2023 to be of CAD 476.9 (USD 343.8million). This is an over five times the net profit recorded in the year 2022.

What's Next?

Looking ahead, the stock appears promising as the nuclear energy and uranium outlook continues to improve. However, two factors should be considered: the possibility of a correction in uranium prices as geopolitical conditions change and the potential entry of more uranium miners into the market. Despite these factors, Cameco remains a strong player in the uranium mining industry, with a history of production and impressive current earnings, which can sustain its stock premium. In the medium to long term, the industry outlook is positive, making it an opportune time to consider buying the stock, even in the face of potential fluctuations.

Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CCJ, over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Harmonic Invest's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Harmonic Invest is not a licensed securities dealer, broker or UK investment adviser or investment bank. Harmonic Invest is managed by an individual writer who is not licensed or certified by any institute or regulatory body.