MENU

Why Cameco Corp. Tanked 6.3% on Friday

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.

3,985 stocks listed between the TSX & TSXV, but here are the 5 we'd buy right now!

Overwhelmed by how many public companies there are to choose from in Canada? Motley Fool Canada Director of Research Iain Butler has you covered. Once a month, Iain and the rest of our team at Stock Advisor Canada reveal their five favourite Canadian stocks for new money now.

Considering they've walloped a "stuck in the mud" TSX by 10% over the past 4 years with truly life-changing winners like Shopify (up 236%, more than tripling your money), you'll probably want to have your front-row seat reserved when our next five "Best Buys Now" are released - exclusively on behalf of Stock Advisor Canada members.

To make sure your name is on the list, just click here now... before the curtain is lifted without you.

Fool contributor Joseph Solitro has no position in the companies mentioned. 

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.