Cameco's Premium Valuation: Is the Stock a Buy, Hold or Sell Now?

Cameco CCJ remains fundamentally strong, supported by the long-term outlook for uranium and its strategic investments in increasing production. As a key player in the global nuclear energy supply chain, the company is well-positioned to benefit from the growing demand for clean energy solutions.

CCJ stock is currently trading at a forward price-to-sales ratio of 13.33, far above the Zacks Mining - Miscellaneous industry’s 1.18 and five-year median of 6.71. Its Value Score of F also suggests an expensive valuation.

Despite trading at such a premium, Cameco is trading lower than uranium peers, Energy Fuels UUUU, which is currently trading at a forward price-to-sales ratio of 27.33 and Uranium Energy UEC, which is trading at a lofty 56.86.

CCJ Stock’s Performance Outpaces Industry, Lags Peers

Cameco has gained 50.3% so far this year, outpacing the industry’s 20.9% growth. The Zacks Basic Materials sector has rallied 19.9% and the S&P 500 has risen 11% in the same time frame. 

Energy Fuels and Uranium Energy have outperformed Cameco, gaining 132% and 76.7%, respectively, year to date. 
 

Cameco Delivered Solid Q2 Results

Cameco reported impressive second-quarter 2025 results, with revenues climbing 47% year over year to $634 million (CAD 877 million) and adjusted earnings per share surging 410% to $0.51 (CAD 0.71). 

Cameco’s uranium revenues increased 47% to $510 million (CAD 705 million). The company sold 8.7 million pounds of uranium, 40% higher than in the second quarter of 2024. Despite a 17% decline in the average U.S. dollar spot price for uranium, the Canadian dollar average realized price increased 5% to CAD 81.03 per pound due to the impact of fixed price contracts.

In Fuel Services, production volume moved up 10% year over year to 3.2 million kgUs and sales volume surged 52% to 4.4 million kgUs. The segment witnessed a 37% rise in revenues to $117 million (CAD 162 million), with higher volumes being offset by lower average realized prices. 

The earnings improvement in the quarter was mainly attributed to stronger equity earnings reflecting Cameco’s 49% investment in Westinghouse Electric Company.

CCJ Cuts McArthur River Output Outlook, Cigar Lake Maintained

Cameco holds a 69.805% stake in the McArthur River mine and 83.33% in the Key Lake mill. McArthur River is known as the largest high-grade uranium mine globally and Key Lake is the world’s largest uranium mill. CCJ also holds a 54.547% stake in Cigar Lake, the world’s highest-grade uranium mine. 

Cameco recently revised its 2025 production outlook from the McArthur River mine due to development delays in transitioning the mine to new mining areas, as well as slower-than-anticipated ground freezing. Its share of production from the operation is now projected at 9.8-10.5 million pounds compared with the 12.6 million expected earlier. 

CCJ’s expected share from the Cigar Lake mine is maintained at 9.8 million pounds. Backed by Cigar Lake’s upbeat performance in the first half and expecting the momentum to continue, Cameco expects it will likely help set off up to 1 million pounds (100% basis) of the production shortfall at the McArthur River.  

Cameco’s Earnings Revision Activity Mixed

The Zacks Consensus Estimate for Cameco’s earnings for fiscal 2025 has moved north over the past 60 days, while the same for 2026 has moved south, as shown in the chart below.

The consensus estimate for Cameco’s earnings for fiscal 2025 indicates year-over-year growth of 130.6%. The same for 2026 implies growth of 31.27%.

CCJ’s Debt Levels Higher Than Peers

At the end of the second quarter of 2025, CCJ had C$716 million ($519 million) in cash and cash equivalents, and C$996 million ($722 million) in long-term debt. CCJ had a total debt to total capital ratio of 0.13 as of June 30, 2025. Meanwhile, Energy Fuels and Uranium Energy have debt-free balance sheets.

Weak Uranium Prices Remain a Challenge for CCJ

Uranium prices have been impacted this year amid an adequate supply and uncertain demand. Even though prices have moved up recently to $76 per pound, it still remains 3.3% below last year’s levels.

Cameco Positioned to Gain on Global Focus on Nuclear Energy

CCJ continues to invest in increasing production and capitalizing on market opportunities. Cameco is extending Cigar Lake’s mine life to 2036 and ramping McArthur River/Key Lake output toward its licensed annual capacity of 25 million pounds. 

Geopolitical events, energy security concerns and the global focus on the climate crisis, amid rising demand for low-carbon energy, have created tailwinds for the nuclear power industry. Given Cameco’s low-cost and high-grade assets and diversified portfolio spanning the nuclear fuel cycle, it is well-positioned to capitalize on these trends.

Is It Wise to Retain Position in CCJ Stock?

Supported by a strong balance sheet, the company is making strategic investments to enhance its capacity to capitalize on the anticipated surge in uranium demand. However, new investors can wait for a better entry point, considering the premium valuation, lowered production outlook and the current volatility in uranium prices. The stock 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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