CENTRUS ENERGY CORP (LEU) stock intrinsic value fair value estimate & owner earnings analysis

Centrus Energy is a uranium enrichment company with two distinct businesses. The larger one (about three-quarters of 2025 revenue) sells enriched uranium (LEU) to nuclear utilities under medium- and long-term contracts; its order book already extends to 2040 and totals roughly $2.9 billion. This business has benefited from a structural shift in the global enrichment market since Russia's invasion of Ukraine in 2022 and the U.S. ban on Russian enriched-uranium imports enacted in 2024, both of which have tightened supply and lifted prices for Western enrichment capacity. The smaller business (about a quarter of revenue) produces high-assay low-enriched uranium (HALEU) for the U.S. Department of Energy under a series of government contracts — this is the growth engine tied to next-generation reactors, but it depends on continued government funding rather than the durable, contracted revenue of the core business. We value the company using the median of the last four fiscal years of owner earnings (cash generated by the business after removing working-capital swings, stock-based compensation, and the portion of capital spending needed just to sustain today's operations). We start the window in 2022 because that is when the market and the government-contract business both changed in a lasting way; using earlier years, when the company was still working through a much weaker pricing environment, would understate what the business earns today. On this basis, normalized owner earnings run at roughly $3.84 per share, though the last four years have ranged widely (roughly $3.20 to $7.40) as one-time items — pension mark-to-market swings, a legacy contract loss provision, uranium inventory timing — move through cash flow. We removed all of these because they are non-cash or timing-related, not calls on the ongoing business. 2025 was unusual: the company raised roughly $1.3 billion — through a stock sale and a new 0%-interest convertible bond — to fund expansion of its enrichment plant in Piketon, Ohio and related facilities. That dilution briefly lowered earnings per share even though total earnings grew. In January 2026, the government selected Centrus for a $900 million contract expansion to build commercial-scale HALEU production capacity at Piketon; this is not yet a signed, fully funded agreement, so we have not assumed it fully materializes, but we have assumed modest near-term growth on the expectation that at least part of this investment converts into earnings over the next few years. Our base case assumes owner earnings grow at a moderate, decelerating pace over the next decade as new capacity comes online and older, underpriced legacy contracts roll onto today's higher prices; we value the durable enrichment business as a slow-growing perpetuity (cascades run for decades once built) and treat the government HALEU work as a shrinking, option-dependent stream that we do not assume continues indefinitely. On this basis we estimate the shares are worth around $88.60. Our bear case assumes the January 2026 government contract does not convert to a firm, well-funded agreement, government HALEU revenue stalls, and the current unusually strong enrichment pricing partially normalizes — this produces a value near $50.80. Our bull case assumes the government contract is finalized promptly, the Piketon and Oak Ridge expansions execute on schedule, and the legacy contract backlog continues repricing favorably — this produces a value near $122.60. Given the width of that range, the margin-of-safety price is around $63.70, a meaningful discount to our base-case estimate, building in a margin of safety against the government-contract risk and the customer concentration in this business (the two largest customers are about 31% of revenue, and the top ten are about 77%). We did not treat the company's convertible notes as a subtraction from value, since these carry little to no cash interest and that cost is already reflected in the cash flow we valued — but the potential for further share dilution is a real risk to per-share value and is reflected in our bear case.