Cameco lands $80B U.S. nuclear deal as Q3 revenue slips but margins and valuation stretch higher

What happened

Cameco announced a landmark $80 billion partnership with the U.S. government that extends its role from a uranium miner into a more fully integrated Western nuclear fuel‑supply provider, reinforcing its strategic importance in the nuclear resurgence. In Q3, reported revenue declined 15% year over year to CA$614 million, but profitability remained robust with a 35% gross margin and a 20% free cash flow margin, helped by higher realized uranium prices and operating optimization at McArthur River. These results are broadly consistent with the DeepValue view of a structurally well‑positioned, vertically integrated player spanning mining, conversion, and downstream services via Westinghouse. The new U.S. deal strengthens medium‑ to long‑term demand visibility and should support contract backlog and price realization as legacy contracts roll off. However, the stock’s valuation has expanded further, with roughly 100x earnings and about 31x EV/EBITDA now embedding much of the long‑term growth that the earlier DeepValue DCF treated as upside optionality rather than base case.

Implication

For equity holders, the $80 billion U.S. partnership is a material positive that enhances Cameco’s role in a secure Western nuclear fuel chain and should underpin multi‑year contracting at attractive terms. At the same time, Q3 showed that even with modest revenue volatility, margins and free cash flow remain strong, reinforcing the quality of the underlying assets and integrated platform. However, the further re‑rating to around 100x earnings and roughly 31x EV/EBITDA means much of this strategic upside is now capitalized in the share price, increasing sensitivity to any operational or policy disappointments. Prospective investors should be cautious about initiating or adding at current levels and may prefer to wait for either a pullback or evidence that the new deal and broader contracting cycle are driving a step‑change in earnings power. Existing holders can justify maintaining core exposure to the nuclear theme but may wish to trim outsized positions and closely monitor execution on the U.S. partnership, contracting cadence, and realized pricing versus expectations.

Thesis delta

The core thesis from the DeepValue master report—that Cameco is a high‑quality, integrated uranium and nuclear services platform but priced at a rich multiple—remains intact, with the new U.S. partnership incrementally strengthening the strategic side of the story. The main change is that valuation risk has risen further: the article’s higher EV/EBITDA multiple versus the prior ~16.5x suggests the market is now baking in more of the long‑term growth that our DCF treated conservatively, leaving even less margin of safety. As a result, the rating effectively stays at HOLD, but with a slightly more cautious stance that supports maintaining core exposure while being more active about trimming strength and demanding a better entry for additional capital.