Tough First Quarter for Cameco, but Long Term Outlook Remains Positive; Shares Undervalued
Cameco faced a tough first quarter of 2017, with severance costs, the TEPCO contract termination, and weak uranium prices weighing on earnings. We expect the severance costs to be short term, Cameco to recoup the value from the TEPCO contract, and uranium prices to rebound starting this year. After rallying 36% to $24.50 per pound in January 2017 from their $18 per pound trough in November 2016 (the lowest in a decade), spot uranium prices have been fairly stagnant year to date, dipping 6% to $2...Cameco and its subsidiaries are engaged in the exploration for and the development, mining, refining, conversion and fabrication of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries. Co. has three reportable segments: uranium, which explores for, mines, mills, purchases, and sells uranium concentrate; fuel services, which refines, converts and fabricates uranium concentrate, and purchases and sells conversion services; and electricity, which generates and sells electricity through its 31.6% interest in the Bruce Power Limited Partnership, which operates four nuclear reactors and manages the overall site in southern Ontario.
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