Is Oklo Stock's Sky-High Valuation Justified or Simply Driven by Hype?

Oklo Inc. OKLO is currently trading at a trailing 12-month price-to-book (P/B) of 31.77x. This represents a strong premium compared with the broader industry average of 5.58x and other players like Talen Energy Corporation TLN and Constellation Energy Corporation CEG, which trade at 12.09x and 7.47x, respectively. Image Source: Zacks Investment ResearchIt signifies that investors are willing to pay a premium price for the stock. But the billion-dollar question is: Is it justified? Before getting into the investment conclusion, let's analyze the company’s fundamentals and overall business outlook.Regulatory Hurdles and Lack of Revenue Cloud OKLO’s OutlookIn early 2025, the company reported no revenues despite several years of development. During the March quarter, it reported an operating loss of $17.9 million, while witnessing $12.2 million of cash outflow from operating activities. This highlights the high costs of their operations. More concerning, Oklo has not yet brought a commercial product to market—their first nuclear plant isn’t expected to operate until late 2027 or early 2028.Oklo’s entire business plan relies heavily on support from the U.S. government. It needs favorable policies, contracts from the Department of Defense (DOD), and most importantly, approval from the Nuclear Regulatory Commission (NRC) to move forward. Although the company is making some progress, the NRC’s approval process is known to be slow and complex. Oklo is still in the early pre-application stage for its first plant. That means there's a long road ahead before any construction or power generation can begin, and any delays or changes in government priorities could significantly impact the company's future.What Investors Should Do Now?Until Oklo builds and runs its first plant, there's no clear way to tell when the company will start earning or how profitable it will be. So, for now, the path to making real profits remains uncertain. Despite the facts, the price chart seems robust, citing the fact that investors are optimistic with the assumption that Oklo will provide clean and reliable energy once its first Aurora plant becomes operational between late 2027 and early 2028. Over the past year, the stock has surged 551%, outperforming the 56.2% growth of the industry’s composite stocks.One-Year Price Chart Image Source: Zacks Investment ResearchUnlike OKLO, which is not generating revenues now, the story of Talen Energy is different. TLN’s major partnership with Amazon Web Services (AWS) is worth highlighting. Talen Energy is generating revenues while supplying electricity directly to AWS data centers located at its Susquehanna nuclear plant site.To capitalize on the mounting demand for power from AI and cloud computing, Constellation Energy, also belonging to the same space, is expanding its nuclear offerings. Thus, the nuclear fleet of CEG is well-positioned as a stable, long-term solution for hyperscale data centers.Coming back to OKLO, the firm hasn’t witnessed any earnings estimate revisions over the past seven days for 2025, and it seems that the stock is trading at levels that don’t match its fundamentals. Hence, investors should stay away from the Oklo, which currently carries a Zacks Rank #4 (Sell). Image Source: Zacks Investment ResearchYou can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Constellation Energy Corporation (CEG): Free Stock Analysis Report Talen Energy Corporation (TLN): Free Stock Analysis Report Oklo Inc. (OKLO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks