Is Uranium Resources a Nuclear Power Play?
Nuclear power has seen better days. In recent decades, pressure from environmentalist groups, the high cost compared to fossil fuels and the perceived risk to public safety has beaten the industry down.
Then along came President Trump, reverser of trends. Our new president is big on nuclear development - both the military and energy varieties. And that means that beaten-down nuclear stocks like Uranium Resources (Nasdaq: URRE) could heat up again soon.
As you can see, Uranium Resources stock has been declining for much of the year. Other nuclear power stocks showed similarly drab performances before the election.
Now President Trump has spurred a revival in this industry. And Investment U readers are wondering whether or not it’s too late for a recovery. After such a long bear market, is Uranium Resources a good buy?
To find out, we ran Uranium Resources stock through the Investment U Fundamental Factor Test. (As a reminder, our checklist looks at six key metrics to diagnose the financial health of a stock.)
Earnings-per-Share (EPS) Growth: Uranium Resources has a great earnings-per-share growth rate of 77.38%. That’s well above the average of 13.21% in the energy space. However, we should note that the nuclear power stock can post such impressive earnings growth because its earnings are still below zero.
Price-to-Earnings (P/E): And since Uranium Resources has negative earnings, we can’t calculate its P/E ratio. We’re giving it the red X in this metric by default.
Debt-to-Equity : The stock outperforms most other energy companies in terms of debt-to-equity ratio. Uranium Resources has a frugal 17.72% debt burden. That’s much less than the industry average of 41.87%.
Free Cash Flow per Share Growth : Uranium Resources really blows other energy companies out of the water in terms of cash flow. It has grown free cash flow per share by 96.27% in the last year. Its competitors saw it shrink by -28.82% in that time.
Profit Margins : Once again, without positive earnings, it’s tough to calculate a meaningful profit margin for Uranium Resources. We have to ding it here again.
Return on Equity : The nuclear power stock falls short in terms of return on equity. Its early-stage investors have lost 54.65% in the last year. The equity situation isn’t great for other energy stocks, but it’s not this bad. Uranium Resources’ competitors have had an average -29.24% return on equity in the last year.
Uranium Resources is clearly on the up and up, as is nuclear power in general. But the company’s negative earnings, profit margin and ROE make it difficult to recommend this stock.
The best course for cautious investors is to watch Uranium Resources in the next few years. If the Trump rally in nuclear energy is strong enough, then the stock could dig itself out of its negative earnings hole soon.
But if not, then the stock will continue to show some fundamental analysis red flags.
For these reasons, Uranium Resources stock has earned a grade of C.
Fundamental Factor Test Score
C: Hold (Hits just three key metrics)
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That's why The Oxford Club offers more than a dozen newsletters and trading advisories. They’re all aimed at helping investors grow and maintain their wealth. For more details,.
If you have a stock you'd like us to analyze, leave the ticker symbol in thesection below.