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CEG Stock Underperforms Industry in a Year: How to Play?
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Constellation Energy Corporation’s (CEG - Free Report) shares have failed to keep pace with the Zacks Alternative Energy - Other industry’s rally in the past year. While the CEG stock has gained 13.7%, it has lagged the industry’s impressive 42.9% jump.
GE Vernova Inc. (GEV - Free Report) , operating in the same industry, has gained 118.8% in the past year. GE Vernova is focused on developing and deploying nuclear technologies, including small modular reactors like the BWRX-300, which is becoming popular and is poised for rapid growth.
Price Performance (One Year)
Image Source: Zacks Investment Research
Should you consider adding CEG to your portfolio only based on weakness in share price compared with the industry? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add CEG stock to their portfolio.
Factors Behind Near-Term Weakness in CEG Stock Price
Constellation Energy is a consistent performer in the nuclear energy space. However, rising concerns related to the expected growth in nuclear energy demand might have weighed on the stock. Artificial intelligence driven data centers in the United States were supposed to create a huge demand for clean electricity from the power sector. However, the Chinese artificial intelligence startup DeepSeek has created reasonable doubt in investors’ minds about the anticipated surge in power demand from data centers.
In January 2025, CEG entered into a definitive agreement to acquire Calpine in a cash and stock transaction. This deal is likely to raise antitrust concerns about potential market dominance in the US electricity industry, particularly on both the supply and retail sides. This deal is likely to face a thorough review from the regulators, and the companies might need to make additional commitments to preserve competition.
Factors Acting as Tailwind for CEG Stock
Constellation Energy’s primary power production comes from its nuclear fleet, and it is well-positioned in terms of nuclear fuel. The company has created a diverse and resilient portfolio that can withstand the nuclear fuel supply disruption and has engaged in multiple long-term uranium supply contracts running well into the 2030s. These steps will ensure continued production from its nuclear fleet.
Constellation Energy’s strategic investment plans and its focus on continuing to expand its renewable portfolio drive its earnings performance. It expects capital expenditures of nearly $3 billion and $3.5 billion for 2025 and 2026, respectively. Nearly 35% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels.
Constellation Energy’s ability to produce a high volume of emission-free electricity from its nuclear plants is the primary contributor to its stable performance. The company’s fleetwide capacity factor has remained more than 94% over the past decade, or about 4% higher than the industry average.
Constellation Energy’s Earnings Estimates Move Up
The Zacks Consensus Estimate for CEG’s 2025 and 2026 earnings per share has moved up 0.8% and 2.5%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Another firm, Vistra Corp. (VST - Free Report) , has a sizeable power production from nuclear power plants. Vistra, through its four nuclear power facilities, generates nearly 6,400 MW of clean energy. The Zacks Consensus Estimate for Vistra’s 2025 and 2026 earnings per share has improved 0.3% and 0.9%, respectively, in the past seven days.
Constellation Energy’s Earnings Surprise History
Constellation Energy’s earnings are consistent, visible, and easy to calculate. It is expected to increase over time through returns on organic growth, PTC inflation, and share repurchases. The company has reported positive earnings surprises in the last four reported quarters.
Image Source: Zacks Investment Research
Another firm, GE Vernova, operating in the same space, lagged estimates in two of the last four quarters, resulting in an average negative surprise of 8.57% in the last four quarters.
CEG Rewards Shareholders Through Buybacks and Dividends
Constellation Energy continues to make share repurchases and has repurchased shares to raise shareholder’s value. In 2023, CEG’s board of directors authorized the repurchase of up to $3 billion of the company's outstanding common stock, after share repurchases in 2024 and 2023. As of Dec. 31, 2024, there was $991 million of remaining authority to repurchase shares of the company's outstanding common stock.
CEG pays a quarterly dividend to its shareholders. The company aims to increase its dividend by 10% annually, subject to its board's approval. Check CEG’s dividend history here.
CEG Returns Higher Than the Industry
Constellation Energy’s trailing 12-month return on equity (“ROE”) of 21.96% is better than the industry average of 8.34%. ROE, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Image Source: Zacks Investment Research
CEG Stock Trades at a Premium
Constellation Energy is currently trading at a premium compared with its industry on a forward 12-month P/E basis. CEG is trading at a P/E F12M of 22.21X compared with its industry average of 19.39X.
Image Source: Zacks Investment Research
Rounding Up
Constellation Energy is benefiting from the well-run nuclear fleet and systematic capital expenditure, which is keeping the production fleet ready to address an increase in clean electricity demand. Rising earnings estimates and strong ROE are positive for the company.
The investors can remain invested in this Zacks Rank #3 (Hold) stock and enjoy the benefits of regular dividends. Given its premium valuation and near-term weakness in share prices, new investors can wait and look for a better entry point.
Image: Bigstock
CEG Stock Underperforms Industry in a Year: How to Play?
Constellation Energy Corporation’s (CEG - Free Report) shares have failed to keep pace with the Zacks Alternative Energy - Other industry’s rally in the past year. While the CEG stock has gained 13.7%, it has lagged the industry’s impressive 42.9% jump.
GE Vernova Inc. (GEV - Free Report) , operating in the same industry, has gained 118.8% in the past year. GE Vernova is focused on developing and deploying nuclear technologies, including small modular reactors like the BWRX-300, which is becoming popular and is poised for rapid growth.
Price Performance (One Year)
Image Source: Zacks Investment Research
Should you consider adding CEG to your portfolio only based on weakness in share price compared with the industry? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add CEG stock to their portfolio.
Factors Behind Near-Term Weakness in CEG Stock Price
Constellation Energy is a consistent performer in the nuclear energy space. However, rising concerns related to the expected growth in nuclear energy demand might have weighed on the stock. Artificial intelligence driven data centers in the United States were supposed to create a huge demand for clean electricity from the power sector. However, the Chinese artificial intelligence startup DeepSeek has created reasonable doubt in investors’ minds about the anticipated surge in power demand from data centers.
In January 2025, CEG entered into a definitive agreement to acquire Calpine in a cash and stock transaction. This deal is likely to raise antitrust concerns about potential market dominance in the US electricity industry, particularly on both the supply and retail sides. This deal is likely to face a thorough review from the regulators, and the companies might need to make additional commitments to preserve competition.
Factors Acting as Tailwind for CEG Stock
Constellation Energy’s primary power production comes from its nuclear fleet, and it is well-positioned in terms of nuclear fuel. The company has created a diverse and resilient portfolio that can withstand the nuclear fuel supply disruption and has engaged in multiple long-term uranium supply contracts running well into the 2030s. These steps will ensure continued production from its nuclear fleet.
Constellation Energy’s strategic investment plans and its focus on continuing to expand its renewable portfolio drive its earnings performance. It expects capital expenditures of nearly $3 billion and $3.5 billion for 2025 and 2026, respectively. Nearly 35% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels.
Constellation Energy’s ability to produce a high volume of emission-free electricity from its nuclear plants is the primary contributor to its stable performance. The company’s fleetwide capacity factor has remained more than 94% over the past decade, or about 4% higher than the industry average.
Constellation Energy’s Earnings Estimates Move Up
The Zacks Consensus Estimate for CEG’s 2025 and 2026 earnings per share has moved up 0.8% and 2.5%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Another firm, Vistra Corp. (VST - Free Report) , has a sizeable power production from nuclear power plants. Vistra, through its four nuclear power facilities, generates nearly 6,400 MW of clean energy. The Zacks Consensus Estimate for Vistra’s 2025 and 2026 earnings per share has improved 0.3% and 0.9%, respectively, in the past seven days.
Constellation Energy’s Earnings Surprise History
Constellation Energy’s earnings are consistent, visible, and easy to calculate. It is expected to increase over time through returns on organic growth, PTC inflation, and share repurchases. The company has reported positive earnings surprises in the last four reported quarters.
Image Source: Zacks Investment Research
Another firm, GE Vernova, operating in the same space, lagged estimates in two of the last four quarters, resulting in an average negative surprise of 8.57% in the last four quarters.
CEG Rewards Shareholders Through Buybacks and Dividends
Constellation Energy continues to make share repurchases and has repurchased shares to raise shareholder’s value. In 2023, CEG’s board of directors authorized the repurchase of up to $3 billion of the company's outstanding common stock, after share repurchases in 2024 and 2023. As of Dec. 31, 2024, there was $991 million of remaining authority to repurchase shares of the company's outstanding common stock.
CEG pays a quarterly dividend to its shareholders. The company aims to increase its dividend by 10% annually, subject to its board's approval. Check CEG’s dividend history here.
CEG Returns Higher Than the Industry
Constellation Energy’s trailing 12-month return on equity (“ROE”) of 21.96% is better than the industry average of 8.34%. ROE, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
Image Source: Zacks Investment Research
CEG Stock Trades at a Premium
Constellation Energy is currently trading at a premium compared with its industry on a forward 12-month P/E basis. CEG is trading at a P/E F12M of 22.21X compared with its industry average of 19.39X.
Image Source: Zacks Investment Research
Rounding Up
Constellation Energy is benefiting from the well-run nuclear fleet and systematic capital expenditure, which is keeping the production fleet ready to address an increase in clean electricity demand. Rising earnings estimates and strong ROE are positive for the company.
The investors can remain invested in this Zacks Rank #3 (Hold) stock and enjoy the benefits of regular dividends. Given its premium valuation and near-term weakness in share prices, new investors can wait and look for a better entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.