NuScale stock needs cash for fuel.
Shares of NuScale Power (SMR 7.92%) tumbled more than 8% in early trading Friday after missing badly on both sales and earnings in its second-quarter financial update last night — that’s the bad news.
The good news for investors in NuScale is that as the morning wears on, NuScale stock has turned around and is already back in the green, and up 4.4% as of 10:20 a.m. ET.
NuScale’s Q2 earnings
Low expectations may lie behind the turnaround. Heading into earnings, analysts only expected NuScale to report $6.9 million in sales, and to lose about $0.13 per share for the quarter. The numbers were worse than that — only $1 million in sales and a loss of $0.31 per share, according to The Fly.
But at least expectations weren’t high to begin with.
With NuScale still in start-up mode, investors are probably less interested in how much revenue and profit NuScale is (or isn’t) producing, and more interested in how many contracts NuScale is signing, and how fast it’s burning through cash.
Is NuScale Power stock a sell?
And on those counts, the news is pretty good. CEO John Hopkins noted that NuScale signed “a revenue generating agreement” with Romania’s RoPower Nuclear company in Q2, advancing the companies’ joint project with Fluor to build a six-reactor small modular nuclear power plant at the former Doicesti coal mine in Romania.
That means more revenue growth could potentially be coming down the line. At the same time, NuScale noted that its cash reserves shrank by only $1.1 million between Q1 and Q2, and the company still has $136 million in cash, and no debt. (The new cash appears to have come from share sales. NuScale’s outstanding share count rose by 17.4 million — 24% — over the past year.)
Still, S&P Global Market Intelligence data confirm that NuScale is still burning cash at the rate of about $175 million a year. Unless something changes soon, investors should brace for more share sales before the year is out.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
