Shares of Oklo Inc. (OKLO – Free Report) have soared an impressive 95.3% over the past three months, outperforming the Zacks Alternative-Energy industry’s return of 1.9% as well as the broader Zacks Oils-Energy sector’s decline of 6.8%. It has also outpaced the S&P 500’s rise of 3% in the same period.
Buoyed by the increasing worldwide adoption of clean energy across industries, Oklo stock has been rallying on impressive quarterly operational performance and strategic partnerships that aim to strengthen its footprint in clean power generation.
A similar stellar performance has been delivered by other industry players, such as Bloom Energy (BE – Free Report) , Diversified Energy Company (DEC – Free Report) and GEV Vernova (GEV – Free Report) , whose shares have surged 115.8%, 46.9% and 27.6%, respectively, over the past three months.
OKLO’s 3-Month Price Performance
Image Source: Zacks Investment Research
What’s Been Pushing Up OKLO Stock?
In November 2024, Oklo announced its third-quarter 2024 results, which reflected some milestone achievements for the company. This, in turn, must have played the role of a major growth catalyst boosting its share price over the past three months. Notably, Oklo added two data center customers to its pipeline in the third quarter, which brought its total announced customer pipeline to 2,100 Megawatts, reflecting a 200% increase since July 2023.
Moreover, Oklo signed a letter of intent to acquire Atomic Alchemy Inc., a manufacturer of radioisotopes. With the market for medical radioisotopes estimated to be $55.7 billion by 2026 and other markets for radioisotopes expected to grow rapidly, this acquisition should be profitable for OKLO and thereby boost its investors’ confidence.
Among its strategic partnerships signed recently, worth mentioning is the one that Oklo inked in December 2024 with Switch to deploy 12 gigawatts of Oklo Aurora powerhouse projects through 2044. This marked one of the largest corporate power agreements in history.
What Lies Ahead for Oklo?
Increasing data center growth across the globe, along with rising electricity consumption, particularly in emerging nations and developing economies, backed by strengthening economic activities and prosperity in these countries, has been boosting global electricity demand. Amid such rising electricity demand, the United States is the world’s largest producer of nuclear power, accounting for about 30% of the worldwide generation of nuclear electricity (as per the latest report by the World Nuclear Association).
To this end, it is imperative to mention that Oklo is developing next-generation fast-fission power plants called “powerhouses.” In particular, its Aurora powerhouse product line is designed to produce 15-50 megawatts electric (MWe) from recycled nuclear fuel and fresh fuel, with the potential to increase the figure to 100 MWe. Thus, Oklo’s long-term growth prospects in the nuclear power generation market remain strong.
However, one must remember that the company has not yet started generating revenues. With its first Aurora powerhouse targeted for deployment in 2027, we may not expect it to deliver any solid top-line performance in the near term.
Meanwhile, OKLO is continuing to incur significant operating expenses to successfully develop its powerhouses, which, in turn, has been putting downward pressure on its bottom line. So, the company’s performance in terms of generating formidable revenues and profit remains slick in the near term, which might be a cause of concern for investors eyeing the stock.
The downward revision observed in its near-term earnings estimate mirrors a similar picture. Such downward revisions are indicative of analysts’ dwindling confidence in the stock of late.
Image Source: Zacks Investment Research
OKLO’s Poor ROE Poses Risk
A quick sneak peek at the company’s return on equity (ROE) over the past year compared to that of its industry shows a dismal scenario. OKLO’s ROE is lower than that of its industry. Moreover, a negative ROE indicates that a company is incurring a loss, as evident from its recent quarterly results.
Image Source: Zacks Investment Research
Final Thoughts
To conclude, investors interested in OKLO stock should wait for a better entry point, considering the downward revision in its earnings estimate and a negative ROE.
However, those who already have this Zacks Rank #3 (Hold) stock in their portfolio may continue to do so, considering its long-term growth prospects and impressive share price performance over the past three months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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