Can LEU's Partnership With KHNP & POSCO Reshape Nuclear Fuel Markets?

Centrus Energy LEU signed a Memorandum of Understanding (MOU) with Korea Hydro & Nuclear Power (“KHNP”) and POSCO International, a subsidiary of POSCO PKX, aimed at attracting private capital to expand its uranium enrichment plant in Piketon, OH. 

Centrus Energy has also revised its February 2025 agreement with KHNP and will now supply higher volumes of low-enriched uranium (LEU).  It is competing for funding from the U.S. Department of Energy to expand the enrichment capacity. This supply commitment to KHNP remains subject to Centrus Energy receiving the funding.

The investment will help LEU compete against foreign, state-owned enterprises that currently dominate the market. The company intends to match federal support with private capital and utility purchase commitments under a public-private partnership.

The collaboration also has options to explore other opportunities, such as additional supply agreements for LEU as well as High-Assay, Low-Enriched Uranium (HALEU) for next-generation reactors.

Korea is leading the development and construction of new reactors around the world. It is one of the largest potential export markets for U.S. enriched uranium, thereby a solid market opportunity for Centrus Energy. KHNP is the world's third-largest nuclear plant operator with 26 nuclear reactors in operation and four under construction. POSCO International is also advancing a next-generation High-Temperature Gas Reactor powered by HALEU.

LEU’s Price Performance, Valuation & Estimates

Centrus Energy shares have soared 197.7% so far this year compared with the industry’s 6.6% growth. During this time, the Basic Materials sector has risen 17.7%, while the S&P 500 has gained 9.8%.

Meanwhile, peer Cameco Corporation CCJ has gained 46.5% year to date. Cameco is one of the largest global providers of uranium. Apart from ownership of the world’s largest high-grade reserves and low-cost operations, Cameco has significant investments across the nuclear fuel cycle, including ownership interests in Westinghouse Electric Company and Global Laser Enrichment. 

LEU is trading at a forward 12-month price/sales multiple of 7.44X, a significant premium to the industry’s 2.80X. Cameco is trading higher, at 12.91X.

The Zacks Consensus Estimate for Centrus Energy’s 2025 earnings is pegged at $4.23 per share, indicating a 5.37% year-over-year decline. The same for 2026 is $3.36, indicating a decline of 20.6%. Here is how the EPS estimates for 2025 and 2026 have been revised over the past 60 days.

The company currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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