Uranium Energy Corp. (UEC) has gained 68.6% over the past month to close yesterday’s trading session at $5.21 due to increasing uranium prices as the global interest in nuclear energy rises amid the Russia-Ukraine war. In addition, it is currently trading 10% below its 52-week high of $5.79, which it hit on November 12, 2021.

UEC recently announced that it had repaid the remaining $10 million balance of its secured credit facility and is now wholly debt-free with $125 million in cash and liquid assets. It also recently acquired the world's fourth-largest uranium producer, Uranium One, for $112 million in cash. This gives the company access to several new projects. However, it hasn't generated any revenue since 2015. So, UEC’s near-term prospects look bleak.

Here’s what could influence UEC’s performance in the upcoming months:

Low Profitability

UEC’s trailing-12-month ROCE, ROTC, and ROTA are negative compared to the industry averages of 8.17%, 4.26%, and 2.72%, respectively.

Stretched Valuation

In terms of forward P/S, UEC’s 318.87x is significantly higher than the industry average of 1.57x. Likewise, its forward EV/S of 291.40x is higher than the industry average of 2.41x.

Unfavorable Analyst Estimates

Analysts expect its EPS to decline at a rate of 400% per annum over the next five years. Also, its EPS is expected to remain negative in the current quarter and next year.

POWR Ratings Reflect Bleak Prospects

UEC has an overall rating of F, which equates to a Sell in our POWR Rating system. The POWR Ratings are calculated by accounting for 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. UEC has a D grade for Quality, in sync with its lower-than-industry profitability ratios.

The stock has an F grade for Stability, consistent with its beta of 2.06. In addition, UEC has an F grade for Value, in sync with its higher-than-industry valuation ratios.

UEC also has a D grade for Growth and Sentiment. This is justified as analysts expect its EPS to remain negative in the near term.

UEC is ranked last out of 35 stocks in the Industrial - Metals industry. Click here to access UEC’s rating for Momentum.

Bottom Line

As the stock looks overvalued at the current price level despite the company not generating any revenue yet, it is best to avoid it now.

How Does Uranium Energy (UEC) Stack Up Against its Peers?

While UEC has an overall POWR Rating of F, you might want to consider investing in the following Industrial - Metals stocks with an A (Strong Buy) rating: Ryerson Holding Corporation (RYI), BHP Group Ltd. ADR (BHP), and Rio Tinto Plc (RIO).

UEC shares were trading at $5.11 per share on Friday afternoon, down $0.10 (-1.92%). Year-to-date, UEC has gained 52.54%, versus a -10.81% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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