Why Cameco Stock Jumped Today After Earnings

On a weak day for the S&P 500 index, shares of Cameco (NYSE:CCJ) were holding up, rallying 4.9% at their highest point in trading through 1 p.m. ET Thursday.

The uranium mining giant reported strong numbers for its fourth quarter and 2024 this morning. But more than the numbers, something management said about the nuclear energy markets appears to have caught investors' attention.

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Cameco delivers strong revenue growth

Although net earnings nearly halved in 2024, demand or sales weren't a concern. The uranium miner's revenue, in fact, shot up by 40% year over year in the fourth quarter and 21% in the full year, driven primarily by higher prices. Cameco's average realized price rose 17% to $58.34 per pound while its sales volumes grew 5% in 2024.

A revaluation of inventories after its Westinghouse acquisition hit Cameco's bottom line. It bought a 49% stake in Westinghouse in late 2023, with Brookfield Renewable and its affiliates owning the remaining share.

Production at Cameco's key mine, McArthur River/Key Lake in northern Saskatchewan, hit a record in 2024, with the company largely crediting automation and digitization for the rise. Production at its other mine, Cigar Lake, fell short of expectations, but the company expects production to pick up in 2025.

Why you should be bullish about Cameco stock

Management expects a strong year ahead thanks to favorable market conditions. In fact, it believes "the outlook for nuclear power and nuclear fuel fundamentals is more favorable than it has been for decades."

That's good news for Cameco and its investors, despite the recent drop in uranium prices. That's because the uranium market -- and business for miners like Cameco -- is less about spot prices and mainly about long-term contracts with utilities.

The company also aligns its production with contract commitments. So, while it delivered 33.6 million pounds of uranium last year, it expects to produce 18 million pounds each from its two mines, or 36 million pounds in total, in 2025.

Total long-term contracts stood at nearly 220 million pounds as of Dec. 30, 2024, and it already has a large pipeline under discussion. That indicates utilities are returning to the uranium contract market after a long lull, which is perhaps the biggest reason investors should remain optimistic. Cameco also increased its annual dividend per share by a solid 33% last year and expects that trend to continue.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and Cameco. The Motley Fool has a disclosure policy.