Is It Too Late to Consider Centrus Energy After Its Huge Multi Year Price Surge?

• If you are wondering whether Centrus Energy is still worth buying after that huge run up, or if you might be late to the party, let's break down what the current price is really telling us about potential future returns.
• The stock has cooled off in the very short term, down 15.9% over the last week and 6.7% over the last month, but it is still up an eye catching 210.2% year to date and 236.6% over the past year, with even bigger gains of 615.7% over 3 years and 724.7% over 5 years.
• These moves have come as investors refocus on Centrus Energy's role in supplying advanced nuclear fuel and its strategic positioning in the push for energy security, especially as governments look for low carbon baseload power. At the same time, policy headlines and funding discussions around nuclear capacity expansion have kept sentiment elevated, even as the stock has become more volatile.
• Despite all that excitement, our structured valuation framework gives Centrus Energy a value score of 0/6, suggesting the market may already be pricing in a lot of optimism. We will walk through the main valuation approaches next and then finish with a more nuanced way to think about what the stock is really worth.

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 model estimates what a business is worth by projecting its future cash flows and then discounting them back to today in $ terms. For Centrus Energy, the model uses a 2 Stage Free Cash Flow to Equity framework based on detailed cash flow projections.

The company generated around $151.2 Million in free cash flow over the last twelve months. Analysts and extrapolations used by Simply Wall St project free cash flow rising from just over $100 Million in the next few years to roughly $199.2 Million by 2035, reflecting steady but moderating annual growth as the business matures.

When these projected cash flows are discounted back, the DCF model arrives at an intrinsic value of about $215.07 per share. Compared with the current share price, this implies the stock is roughly 6.8% overvalued. This suggests expectations already incorporate much of the anticipated cash flow growth.

Result: ABOUT RIGHT

Centrus Energy is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

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 price to earnings (PE) ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current profits. In general, faster growth and lower perceived risk justify a higher PE, while slower or more uncertain growth tends to pull a normal or fair PE down.

Centrus currently trades on a PE of around 36.8x, which is well above both the broader Oil and Gas industry average of about 13.0x and the peer group average of roughly 16.2x. To move beyond simple comparisons, Simply Wall St calculates a proprietary Fair Ratio of 11.1x. This reflects what PE might be justified given Centrus Energy's earnings growth profile, industry, profit margins, market cap and specific risk factors.

This Fair Ratio is more informative than just lining Centrus up against peers because it adjusts for company specific fundamentals rather than assuming all firms in the sector deserve similar valuations. With the current PE of 36.8x sitting far above the Fair Ratio of 11.1x, the multiple based view suggests the stock is pricing in a lot of optimism and looks overvalued on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Centrus Energy Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a simple way to connect your view of Centrus Energy's future with concrete numbers like revenue, earnings, margins and fair value.

A Narrative is your story about a company translated into a financial forecast, where you spell out how fast you think Centrus can grow, what margins might look like, and what multiple the market could pay, and then link that to an estimated fair value for the stock.

On Simply Wall St, millions of investors build and share these Narratives on the Community page, and the platform then compares each Narrative's Fair Value to the current share price to help you decide how Centrus might fit into your own investment view under your assumptions.

Because Narratives are updated dynamically as new information comes in, such as DOE funding decisions, plant expansion news or earnings surprises, your fair value view stays aligned with the latest data rather than a static model.

For Centrus today, one Narrative on the platform might assume robust nuclear demand, successful Piketon expansion and justify a fair value closer to around $310 per share, while a more cautious Narrative might focus on execution risk, dilution and policy uncertainty and arrive closer to about $108. Seeing those side by side can make it easier to compare different perspectives and decide which story you find more compelling.

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.

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