Why Centrus Energy Stock Crashed Today
Key Points
-
Centrus Energy announced a large debt issuance last night.
-
The uranium supply company could raise as much as $750 million in new cash.
-
It could also be setting up investors for a large amount of stock dilution.
Shares of Centrus Energy (NYSEMKT: LEU) nosedived 9.9% through 9:45 a.m. ET Wednesday.
The supplier of low-enriched uranium used as atomic fuel for nuclear power plants announced last night that it will issue $650 million worth of convertible senior notes due in 2032 (i.e., debt convertible into stock) in an effort to raise the cash it needs to build a supplemental business producing high-assay, low-enriched uranium (HALEU) for use in advanced reactors.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Image source: Getty Images.
Details, details
If there’s sufficient interest among the banks underwriting the debt offering, Centrus might upsize its debt offering by $100 million, to $750 million total.
Centrus hasn’t yet said what interest rate the notes will pay, although in deals like these notes often pay interest below market rates for ordinary debt. The downside for investors is more on the convertible side of things — where the company issuing the notes eventually lets its lenders convert the notes into equity in the company, diluting the shareholdings of existing investors.
Should you sell Centrus stock?
It’s not immediately clear why Centrus is doing this offering. Profitable where most “nuclear stocks” are losing money, Centrus generates significant free cash flow already — $107 million over the last 12 months — so there seems to be no immediate cash need. Indeed, Centrus already has more cash than debt on its balance sheet, and seems in a pretty healthy condition.
Viewed most favorably, this suggests Centrus will probably get pretty good terms on its debt offering, keeping interest expense low. It also suggests Centrus has a deal in mind, or at the very least, is prepared to make a big push toward building out its HALEU uranium business.
Investors are selling Centrus stock, and I understand why. But I rather suspect they should be buying Centrus stock instead.
Should you invest $1,000 in Centrus Energy right now?
Before you buy stock in Centrus Energy, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Centrus Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $653,427!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*
Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of August 13, 2025
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.