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Should Constellation (CEG) Be in Your Portfolio Before Q1 Earnings?
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Constellation Energy Corporation (CEG - Free Report) is scheduled to release first-quarter 2024 results on May 9. This utility reported a negative earnings surprise of 106.5% in the last reported quarter.
The Zacks Consensus Estimate for earnings is pegged at $1.99 per share on revenues of $8.4 billion. The top and bottom-line estimates suggest increases of 11.1% and 586.2%, respectively, from those reported a year ago.
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.
At present, Constellation has an Earnings ESP of -16.37% and a Zacks Rank of 3.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Constellation Energy Corporation Price and EPS Surprise
Constellation utilizes nuclear energy to produce clean electricity. The nuclear production tax credit (PTC) in the IRA provides a stable foundation for consistent and growing earnings for the company. PTC provides revenue certainty for the company while maintaining its ability to capture power price upside from the market,
CEG is the largest producer of carbon-free energy in the United States and is expanding production volume through acquisition of more nuclear plants. The company efficiently provides clean electricity to nearly 21% of the Competitive Commercial & Industrial (C&I) customers in the United States. Rising demand for clean electricity from C&I group is likely to have boosted performance of the company.
The company has engaged in multiple long-term uranium supply contracts. Uranium is the most essential ingredient needed to produce electricity from nuclear power plant. It has built a diverse and resilient portfolio that can withstand a Russian uranium supply disruption and can continue to produce clean energy for its consumers.
CEG’s nuclear fleet is well maintained and operated compared with its peers. The annual nuclear capacity factor has been more than 94% in the past five years compared with national average of nearly 91%. The scheduled average nuclear refueling outage is also lower than national average. The high-capacity factor and availability of the power plant are expected to continue in 2024 and it will provide ample clean electricity to the company to serve its customers.
Another advantage for the company is that a nuclear power plant can produce much higher volume of clean energy compared with other clean source of energy and takes very little space to do so.
Constellation Energy’s first-quarter earnings are likely to have benefited from ongoing share repurchases of the company. It repurchased shares worth $1 billion in 2023 and have already started to buyback more shares in 2024.
Headwinds
Despite having a well-run nuclear plant fleet, Nuclear Regulatory Commission’s (NRC) actions could negatively impact the operations and profitability of CEG’s nuclear generating fleet. Change in The Atomic Energy Act could require a substantial increase in capital expenditures or could result in increased operating or decommissioning costs. Events at nuclear plants owned by others, could cause NRC to initiate such actions, on which Constellation Energy have no control.
Bottom Line
Despite some headwinds, it is advisable to hold on to this utility stock for the long term, given its well-run clean electricity producing assets in the United States, ability to pay regular dividend and focus on expanding its operations through organic or inorganic methods.
Stocks to Consider
Here are a few companies from the same sector that, per our model, have the right combination of elements to beat on earnings in their upcoming releases.
The Zacks Consensus Estimate for earnings implies an increase of 0.5% in the past 60 days.
Aemetis, Inc. (AMTX - Free Report) is scheduled to release first-quarter numbers on May 9. AMTX currently has an Earnings ESP of +19.35% and a Zacks Rank #3.
The Zacks Consensus Estimate for earnings indicates a decrease of 24.6% from the year-earlier levels.
Nextracker Inc. (NXT - Free Report) is slated to report fourth-quarter fiscal 2024 figures on May 14. NXT presently has an Earnings ESP of +9.80% and a Zacks Rank #3.
The Zacks Consensus Estimate for NXT’s fiscal 2024 earnings suggests a rise of 0.4% in the past 60 days.
Image: Bigstock
Should Constellation (CEG) Be in Your Portfolio Before Q1 Earnings?
Constellation Energy Corporation (CEG - Free Report) is scheduled to release first-quarter 2024 results on May 9. This utility reported a negative earnings surprise of 106.5% in the last reported quarter.
The Zacks Consensus Estimate for earnings is pegged at $1.99 per share on revenues of $8.4 billion. The top and bottom-line estimates suggest increases of 11.1% and 586.2%, respectively, from those reported a year ago.
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.
At present, Constellation has an Earnings ESP of -16.37% and a Zacks Rank of 3.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Constellation Energy Corporation Price and EPS Surprise
Constellation Energy Corporation price-eps-surprise | Constellation Energy Corporation Quote
Factors Acting in Favor
Constellation utilizes nuclear energy to produce clean electricity. The nuclear production tax credit (PTC) in the IRA provides a stable foundation for consistent and growing earnings for the company. PTC provides revenue certainty for the company while maintaining its ability to capture power price upside from the market,
CEG is the largest producer of carbon-free energy in the United States and is expanding production volume through acquisition of more nuclear plants. The company efficiently provides clean electricity to nearly 21% of the Competitive Commercial & Industrial (C&I) customers in the United States. Rising demand for clean electricity from C&I group is likely to have boosted performance of the company.
The company has engaged in multiple long-term uranium supply contracts. Uranium is the most essential ingredient needed to produce electricity from nuclear power plant. It has built a diverse and resilient portfolio that can withstand a Russian uranium supply disruption and can continue to produce clean energy for its consumers.
CEG’s nuclear fleet is well maintained and operated compared with its peers. The annual nuclear capacity factor has been more than 94% in the past five years compared with national average of nearly 91%. The scheduled average nuclear refueling outage is also lower than national average. The high-capacity factor and availability of the power plant are expected to continue in 2024 and it will provide ample clean electricity to the company to serve its customers.
Another advantage for the company is that a nuclear power plant can produce much higher volume of clean energy compared with other clean source of energy and takes very little space to do so.
Constellation Energy’s first-quarter earnings are likely to have benefited from ongoing share repurchases of the company. It repurchased shares worth $1 billion in 2023 and have already started to buyback more shares in 2024.
Headwinds
Despite having a well-run nuclear plant fleet, Nuclear Regulatory Commission’s (NRC) actions could negatively impact the operations and profitability of CEG’s nuclear generating fleet. Change in The Atomic Energy Act could require a substantial increase in capital expenditures or could result in increased operating or decommissioning costs. Events at nuclear plants owned by others, could cause NRC to initiate such actions, on which Constellation Energy have no control.
Bottom Line
Despite some headwinds, it is advisable to hold on to this utility stock for the long term, given its well-run clean electricity producing assets in the United States, ability to pay regular dividend and focus on expanding its operations through organic or inorganic methods.
Stocks to Consider
Here are a few companies from the same sector that, per our model, have the right combination of elements to beat on earnings in their upcoming releases.
Enbridge Inc. (ENB - Free Report) is set to post first-quarter results on May 10. ENB currently has an Earnings ESP of +0.85% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings implies an increase of 0.5% in the past 60 days.
Aemetis, Inc. (AMTX - Free Report) is scheduled to release first-quarter numbers on May 9. AMTX currently has an Earnings ESP of +19.35% and a Zacks Rank #3.
The Zacks Consensus Estimate for earnings indicates a decrease of 24.6% from the year-earlier levels.
Nextracker Inc. (NXT - Free Report) is slated to report fourth-quarter fiscal 2024 figures on May 14. NXT presently has an Earnings ESP of +9.80% and a Zacks Rank #3.
The Zacks Consensus Estimate for NXT’s fiscal 2024 earnings suggests a rise of 0.4% in the past 60 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.