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Reasons to Add Constellation Energy (CEG) to Your Portfolio Now
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Constellation Energy Corporation’s (CEG - Free Report) strategic investments, focus on renewable energy, ability to boost shareholders’ and rising estimates for earnings make it a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 and 2025 earnings per share has moved up 2.8% and 6.4%, respectively, in the past 60 days.
CEG’s long-term (three-to-five years) earnings growth rate is 14.6%. The company delivered an average earnings surprise of 49.4% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, Constellation Energy’s ROE is 18.14%, higher than the industry’s average of 17.02%. This indicates that the company has been utilizing the funds more constructively than its peers in the alternate energy industry.
Solvency
The times interest earned ratio or solvency ratio is used to measure how well a company can cover its interest obligations. This ratio at the end of first-quarter 2024 was 8.2, which, being greater than one, indicates that CEG is in a good position to meet its interest obligations.
Dividend & Share Repurchase
The company continues to raise its shareholders’ value through payment of dividend and buyback of shares. Management had increased dividend 150% in the first two years. It plans to grow its dividend per share by 25% this year and targets dividend growth of 10% annually in future years. At present, its quarterly dividend is 35.25 cents per share, resulting in an annualized dividend of $1.41 per share.
During 2023, CEG repurchased from the open market approximately 10.6 million shares of common stock for a total cost of $1 billion. The company have started next $1 billion share repurchase program.
Investment
Constellation Energy’s strategic capital investment plans and contribution from its expanding clean energy generation portfolio are likely to drive its future earnings. In 2023, the company made capital expenditures of $2.5 billion. It expects nearly $5.1 billion of capital expenditures during 2024-2025 period.
Nearly, 45-47% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels.
Price Performance
In the last six months, CEG stock has returned 80% compared with the industry’s 29% growth.
CRGY reported average earnings surprise of 112.3% in the last four reported quarters. The Zacks Consensus Estimate for 2024 and 2025 has moved up by 83.7% and 89.3%, respectively, in the past 60 days.
Talen Energy reported average earnings surprise of 152.7% in the last four reported quarters. The Zacks Consensus Estimate for 2024 and 2025 has moved up by 16.4% and 176.1%, respectively, in the past 60 days.
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Reasons to Add Constellation Energy (CEG) to Your Portfolio Now
Constellation Energy Corporation’s (CEG - Free Report) strategic investments, focus on renewable energy, ability to boost shareholders’ and rising estimates for earnings make it a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 and 2025 earnings per share has moved up 2.8% and 6.4%, respectively, in the past 60 days.
CEG’s long-term (three-to-five years) earnings growth rate is 14.6%. The company delivered an average earnings surprise of 49.4% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, Constellation Energy’s ROE is 18.14%, higher than the industry’s average of 17.02%. This indicates that the company has been utilizing the funds more constructively than its peers in the alternate energy industry.
Solvency
The times interest earned ratio or solvency ratio is used to measure how well a company can cover its interest obligations. This ratio at the end of first-quarter 2024 was 8.2, which, being greater than one, indicates that CEG is in a good position to meet its interest obligations.
Dividend & Share Repurchase
The company continues to raise its shareholders’ value through payment of dividend and buyback of shares. Management had increased dividend 150% in the first two years. It plans to grow its dividend per share by 25% this year and targets dividend growth of 10% annually in future years. At present, its quarterly dividend is 35.25 cents per share, resulting in an annualized dividend of $1.41 per share.
During 2023, CEG repurchased from the open market approximately 10.6 million shares of common stock for a total cost of $1 billion. The company have started next $1 billion share repurchase program.
Investment
Constellation Energy’s strategic capital investment plans and contribution from its expanding clean energy generation portfolio are likely to drive its future earnings. In 2023, the company made capital expenditures of $2.5 billion. It expects nearly $5.1 billion of capital expenditures during 2024-2025 period.
Nearly, 45-47% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels.
Price Performance
In the last six months, CEG stock has returned 80% compared with the industry’s 29% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Cresent Energy Company (CRGY - Free Report) and Talen Energy Corporation (TLNE - Free Report) , each sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
CRGY reported average earnings surprise of 112.3% in the last four reported quarters. The Zacks Consensus Estimate for 2024 and 2025 has moved up by 83.7% and 89.3%, respectively, in the past 60 days.
Talen Energy reported average earnings surprise of 152.7% in the last four reported quarters. The Zacks Consensus Estimate for 2024 and 2025 has moved up by 16.4% and 176.1%, respectively, in the past 60 days.