Centrus Energy's Stock Surge Highlights Growth but Amplifies Overvaluation Concerns

What happened

Centrus Energy's stock has surged nearly 300% year-to-date, driven by reported Q3 revenue growth and a backlog that swelled to $3.9 billion, as highlighted in a recent article. The company is advancing major enrichment expansion plans, capitalizing on U.S. policy tailwinds from the ban on Russian uranium imports. However, the DeepValue master report indicates the stock trades approximately 275% above its intrinsic DCF value of around $65 per share, signaling severe overvaluation. Critical underlying risks include heavy reliance on Russian supplier TENEX through 2027, over $1.2 billion in convertible debt posing dilution risks, and emerging domestic competition from players like General Matter. Despite the positive operational developments, these factors suggest the rally may be overextended and disconnected from fundamentals.

Implication

The recent stock surge reflects market optimism on backlog growth and expansion plans, but it likely prices in overly optimistic outcomes without accounting for key vulnerabilities. DeepValue analysis reveals a stark valuation disconnect, with the stock trading far above intrinsic estimates despite reliance on Russian supply and policy uncertainties that could disrupt deliveries. Execution risks in scaling HALEU production, potential equity dilution from convertible notes, and competitive pressures threaten future earnings and cash flow stability. While supportive U.S. policies provide a tailwind, binary geopolitical events or funding delays could materially impair equity value. Prudent investors should await concrete de-risking of Russian exposure, sustainable contract wins, and a valuation pullback toward peer ranges before considering an investment.

Thesis delta

The new article confirms Centrus's operational momentum with a growing backlog and expansion progress, but this does not shift the core investment thesis. The stock remains excessively valued against unchanged risks like Russian dependence and debt overhang, and no fundamental reassessment is warranted until these issues are mitigated or valuation aligns with fundamentals.