Is It Too Late To Consider Centrus Energy (LEU) After A 323% One Year Surge?

• If you are wondering whether Centrus Energy's current share price reflects its true worth, you are not alone. The stock's recent run has many investors asking if the value case still stacks up.
• The shares last closed at US$311.89, with returns of 26.3% over 7 days, 17.2% over 30 days, 14.5% year to date and 323.5% over 1 year, while the 3 year and 5 year returns are very large at around 8x and more than 13x respectively.
• These sharp moves have come as Centrus Energy has stayed in focus for investors watching the nuclear fuel space and related policy developments, with attention on how the company fits into long term supply chains and energy security themes. That backdrop has kept debate active around whether recent price action is driven more by sentiment, expectations or underlying fundamentals.
• Despite this performance, Simply Wall St's valuation model currently gives Centrus Energy a valuation score of 0 out of 6. Next we will look at how different valuation methods assess the stock and then finish with a way to think about valuation that goes beyond the usual numbers.

Centrus Energy scores just 0/6 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 company might be worth by projecting its future cash flows and then discounting those back to today using a required return. In this case, the model uses a 2 Stage Free Cash Flow to Equity approach.

Centrus Energy is currently generating last twelve month free cash flow of about $151.24 million. Analyst and extrapolated projections used in this model have free cash flow reaching $246.57 million in 2035, with intermediate years such as 2030 at $176 million. Simply Wall St uses analyst inputs for approximately the first five years, then extends the trend to produce the 10 year view shown in this data.

When all those projected cash flows are discounted back, the model arrives at an intrinsic value of about $258.64 per share. Compared to the recent share price of $311.89, this suggests the stock is around 20.6% above this DCF-derived estimate of value.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Centrus Energy may be overvalued by 20.6%. Discover 877 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Centrus Energy.

Approach 2: Centrus Energy Price vs Earnings

For a profitable company like Centrus Energy, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. A higher P/E can sometimes reflect higher expected growth or lower perceived risk, while a lower P/E can reflect more modest expectations or higher uncertainty.

Centrus Energy currently trades on a P/E of 49.96x. That sits well above the Oil and Gas industry average P/E of 13.13x and also above the peer average of 16.07x. On simple comparisons, the shares look expensive relative to both the sector and peers.

Simply Wall St also uses a proprietary “Fair Ratio” to estimate what a more tailored P/E might look like, given factors such as the company’s earnings growth profile, profit margin, industry, market cap and specific risks. Because it incorporates these elements, the Fair Ratio can be more informative than a basic peer or industry comparison. For Centrus Energy, the Fair Ratio is 12.17x, which is well below the current P/E of 49.96x and suggests the shares trade at a richer earnings multiple than this framework would indicate.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Centrus Energy Narrative

Earlier we mentioned that there is an even better way to think about valuation, and on Simply Wall St that means using Narratives. Narratives let you turn your view of Centrus Energy into a clear story that links its business outlook to a financial forecast and then to a fair value, all on the Community page where millions of investors share their perspectives. You might see one Narrative that leans cautious, focusing on risks around policy timing, equity dilution and the possibility that earnings land closer to the lower end of analyst expectations, with a fair value near US$108. Another might lean optimistic, highlighting the company’s role in nuclear fuel supply, its backlog and funding access, with a fair value closer to US$310. As new news or earnings arrive, these Narratives update automatically, helping you compare each author’s Fair Value to the current share price and decide how that aligns with your own view.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com