Centrus Energy (LEU) drew fresh investor attention after announcing a major expansion of its Oak Ridge, Tennessee facility, supported by state incentives and federal funding related to U.S. nuclear fuel security priorities.

The latest Oak Ridge expansion headlines come after a choppy period for the stock. A 1 day share price return of 4.96% lifted the share price to $280.47. However, the 90 day share price return shows a 13.89% decline, which contrasts with a very large 5 year total shareholder return. This suggests long term momentum has been strong even as near term sentiment has cooled.

If this kind of nuclear fuel story has you thinking about the wider sector, it could be a useful moment to see what else is setting up in aerospace and defense stocks.

With Centrus now backed by government funding, multi year expansion plans and a very large long term return record, the key question is simple: are you looking at an undervalued nuclear cornerstone, or is the market already pricing in its future growth?

Most Popular Narrative: 30% Overvalued

With Centrus Energy last closing at $280.47 versus a narrative fair value of $279.73, the current price sits slightly above that framework and leans on ambitious long term assumptions.

The analysts have a consensus price target of $229.3 for Centrus Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $310.0, and the most bearish reporting a price target of just $108.0.

Curious what has to happen for those earnings, margins and contract wins to stack up to that valuation? The narrative leans on firm revenue growth, shifting profitability and a future earnings multiple that is usually reserved for fast growing sectors. Want to see which specific assumptions carry the most weight in that fair value calculation and how much room they leave for surprises?

Result: Fair Value of $279.73 (OVERVALUED)

However, if long term nuclear fuel demand stays weaker than analysts expect or Department of Energy contracts are delayed, that rich implied 87.7x 2028 P/E could look exposed.

Build Your Own Centrus Energy Narrative

If you look at the numbers and reach a different conclusion, or simply prefer to test your own assumptions, you can build a custom view in just a few minutes with Do it your way.

A great starting point for your Centrus Energy research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.