NuScale Power Corporation: Recent Stock Performance Overview
In the last month, NuScale Power SMR shares saw a significant decline of 20.3%, performing below the Computer & Technology sector’s growth rate of 0.3% and the Electronics-Power Generation industry’s fall of 5.7%. The drop in stock value can be linked to modest revenue growth expectations for 2024.
The second-quarter of 2024 results showcased revenues of $1 million and a loss of $74.4 million, reflecting a decrease from the previous year. Despite noteworthy projects like the Phase 2 Front End Engineering and Design authorization from RoPower, the lack of immediate revenue generation opportunities casts a shadow on NuScale’s short-term outlook.
Data Center Power Demand and NuScale’s Position
NuScale’s modular 77-megawatt electric Light Water Reactor nuclear power plant caters to the rising demand for continuous power needed to support data centers. The increasing consumption by data centers is expected to surge to 9.1% of U.S. Power Consumption by 2030 from 4% in 2023.
With prominent companies like Amazon, Google, Meta Platforms, and Microsoft ramping up their data center infrastructures, NuScale stands to benefit. The company positions itself as a provider of steady power solutions essential for renewable energy requirements and achieving net-zero emissions goals in the future.
Earnings Estimate and Valuation Analysis
The Zacks Consensus Estimate predicts a decline in NuScale’s revenues and earnings for the third quarter and the full year 2024. The stock is considered overvalued currently, evident from the F Value Score and a high Price/Sales ratio of 52.61X compared to the industry’s 2.92X.
Insights for Investors
Although NuScale’s nuclear power technology holds promise for long-term growth based on the increasing demand for power for data centers, its financial performance indicates caution. The stock currently holds a Zacks Rank #3 (Hold), suggesting a wait-and-watch approach for potential investors seeking a more favorable entry point.
In a market where factors like technical indicators signal bearish trends, investors are advised to tread carefully and evaluate the long-term sustainability of NuScale’s business strategy amidst sectoral and industry challenges.