Cameco Corp. (TSX:CCO)(NYSE:CCJ), one of the world’s largest uranium producers, announced its third-quarter earnings results before the market opened on Friday, and its stock responded by falling 6.3% in the day’s trading session. The stock now sits more than 39% below its 52-week high of $17.65 reached back on January 16, so let’s break down the quarterly results to determine if now is finally the time to buy.
The results that ignited the sell-off
Here’s a quick breakdown of eight of the most notable financial statistics from Cameco’s three-month period ended September 30, 2017, compared with the same period in 2016:
| Metric | Q3 2017 | Q3 2016 | Change |
| Revenue: Uranium segment | $385 million | $526 million | (26.8%) |
| Revenue: Fuel services segment | $69 million | $77 million | (10.4%) |
| Revenue: NUKEM segment | $32 million | $67 million | (52.2%) |
| Total revenue | $486 million | $670 million | (27.5%) |
| Gross profit | $51 million | $146 million | (65.1%) |
| Adjusted net earnings (losses) | ($50 million) | $118 million | >(100%) |
| Adjusted earnings per common share (EPS) | ($0.13) | $0.30 | >(100%) |
| Cash provided by operations | $154 million | $385 million | (60%) |
What should you do now?
As the numbers above show, it was a horrible quarter overall for Cameco, which has been an ongoing theme for the company in 2017; in the first nine months of the year, its revenue is down 12.7% year over year to $1.35 billion, its gross profit is down 35.2% year over year to $199 million, and its adjusted net earnings have fallen from a positive $0.21 per share in the year-ago period to a loss of $0.36 per share.
With all of this being said, I think the sell-off in Cameco’s stock on Friday was warranted. Furthermore, I would avoid the stock going forward, because I would not risk investing in a company with revenues and earnings in a rapid decline, and because there are much better investment options elsewhere in the industry today.
