Centrus Energy (LEU) is back in focus after announcing plans to turn its Oak Ridge, Tennessee facility into a high rate centrifuge manufacturing plant, backed by significant state support and federal funding.

The Oak Ridge expansion comes after a volatile stretch for Centrus Energy, with a 21.66% 1 month share price return but a 20.84% 3 month share price decline. The 1 year total shareholder return is very large, suggesting that long term momentum remains strong even as shorter term sentiment fluctuates around valuation questions.

If this kind of nuclear fuel story has your attention, it could be a good moment to see what else is setting up in aerospace and defense stocks as the sector evolves.

With Centrus posting a value score of 0 out of 6 despite solid profits, no net debt and fresh backing for its expansion plans, you have to ask whether the stock still offers mispriced potential or whether markets are already pricing in future growth.

Most Popular Narrative: 10.6% Overvalued

Centrus Energy's most followed valuation narrative pegs fair value at $279.73, sitting below the last close at $309.39. This raises sharp questions about what assumptions are doing the heavy lifting.

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.

There is a large gap between those views. Revenue growth, profit margins and a rich future earnings multiple all sit at the core of this fair value story. Curious which specific profit and valuation assumptions push the narrative to $279.73 while the current price runs ahead of it? The full narrative lays out the numbers and the trade offs behind them.

Result: Fair Value of $279.73 (OVERVALUED)

However, if robust nuclear fuel demand and long term contract visibility turn out to be stronger than expected, Centrus' $3.6b backlog and HALEU positioning could challenge this overvalued call.

Build Your Own Centrus Energy Narrative

If this fair value story does not quite fit how you see Centrus, or you prefer testing the inputs yourself, you can spin up a custom narrative 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.

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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.