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Constellation Energy Shares Gain 86.4% in a Year: Should You Buy?
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Shares of Constellation Energy Corporation (CEG - Free Report) have rallied 86.4% over the past year compared with its industry’s growth of 28.7%. CEG continues to add clean energy to the grid through its efficient operation of nuclear plants and extending the lives of existing plants through new licenses.
The solid year-to-date performance of Constellation Energy allowed it to increase its guidance for 2024 earnings per share.
The CEG stock has also outperformed its sector and the S&P 500 over the past year.
One-Year Price Performance
Image Source: Zacks Investment Research
A pertinent question might appear in investors' minds, whether the stock can move higher from the current level or has reached the top. Let us delve deeper into the fundamental aspects of the company and throw some light in that direction.
Factors Acting as Tailwinds for CEG Stock
Constellation Energy’s sustainable business strategy is responding to the climate crisis caused by the emissions generated from power production and delivering long-term value for customers, employees and shareholders. CEG’s highly efficient nuclear fleet continues to create huge volumes of clean electricity to meet customers’ requirements.
The capacity factor of the majority of the nuclear power plants owned by Constellation Energy is showing an improvement, which makes them more reliable than other renewable sources of energy like wind and solar. CEG-owned nuclear power plants had a 95.4% capacity factor for the second quarter of 2024 compared with 92.4% for the second quarter of 2023, reflecting increased clean power production.
Constellation Energy is also benefiting from artificial intelligence (AI) and data center-driven clean power demand. Per a Business Insider report, major tech companies are going to invest nearly $1 trillion in data centers in the next five years. AI-driven data centers require more electricity than traditional data center racks. CEG can gain from rising clean energy demand from data centers, with its ability to generate in excess of 45 gigawatts (GW) of clean energy and its increasing capacity.
Constellation Energy Raises Shareholder Value
Constellation Energy continues to make share repurchases and has repurchased shares worth $1 billion year to date and has $1 billion remaining under its share repurchase program. The company has more than $2.3 billion of capital left to be allocated for 2024 and 2025.
Constellation Energy 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’s ROA Higher Than Its Industry
CEG’s trailing 12-month return on assets (ROA) is 3.56%, ahead of the industry average of 3.51%. ROA is a financial ratio that measures how well a company uses its assets to generate profit. The current ROA of the company indicates that it is using its assets more efficiently than its peers.
Image Source: Zacks Investment Research
Constellation Energy’s Earnings Estimates Move Up
Courtesy of its strong year-to-date performance, Constellation Energy has raised its 2024 earnings per share guidance to $7.60-$8.40 from the prior mentioned $7.23-$8.03. The Zacks Consensus Estimate for CEG’s 2024 and 2025 earnings per share moved up 4.4% and 2.5%, respectively, in the last 60 days. The upward revisions in earnings estimates indicate analysts’ increasing confidence in the stock.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share of its peer NRG Energy (NRG - Free Report) moved down 9.5% and 10.5%, respectively, in the last 60 days.
Image Source: Zacks Investment Research
CEG Stock Trades at a Premium
The company is currently trading at a premium compared with its industry on a forward 12-month P/E basis.
Image Source: Zacks Investment Research
Summing Up
Constellation Energy is benefiting from the increasing demand for clean energy in its service territories, driven by the development of AI-driven data centers. CEG’s strong production capacity will allow it to meet the rising demand.
It is better to remain invested in this Zacks Rank #3 (Hold) stock and enjoy the benefits of dividends, share buybacks and rising earnings estimates.
Image: Bigstock
Constellation Energy Shares Gain 86.4% in a Year: Should You Buy?
Shares of Constellation Energy Corporation (CEG - Free Report) have rallied 86.4% over the past year compared with its industry’s growth of 28.7%. CEG continues to add clean energy to the grid through its efficient operation of nuclear plants and extending the lives of existing plants through new licenses.
The solid year-to-date performance of Constellation Energy allowed it to increase its guidance for 2024 earnings per share.
The CEG stock has also outperformed its sector and the S&P 500 over the past year.
One-Year Price Performance
Image Source: Zacks Investment Research
A pertinent question might appear in investors' minds, whether the stock can move higher from the current level or has reached the top. Let us delve deeper into the fundamental aspects of the company and throw some light in that direction.
Factors Acting as Tailwinds for CEG Stock
Constellation Energy’s sustainable business strategy is responding to the climate crisis caused by the emissions generated from power production and delivering long-term value for customers, employees and shareholders. CEG’s highly efficient nuclear fleet continues to create huge volumes of clean electricity to meet customers’ requirements.
The capacity factor of the majority of the nuclear power plants owned by Constellation Energy is showing an improvement, which makes them more reliable than other renewable sources of energy like wind and solar. CEG-owned nuclear power plants had a 95.4% capacity factor for the second quarter of 2024 compared with 92.4% for the second quarter of 2023, reflecting increased clean power production.
Constellation Energy is also benefiting from artificial intelligence (AI) and data center-driven clean power demand. Per a Business Insider report, major tech companies are going to invest nearly $1 trillion in data centers in the next five years. AI-driven data centers require more electricity than traditional data center racks. CEG can gain from rising clean energy demand from data centers, with its ability to generate in excess of 45 gigawatts (GW) of clean energy and its increasing capacity.
Constellation Energy Raises Shareholder Value
Constellation Energy continues to make share repurchases and has repurchased shares worth $1 billion year to date and has $1 billion remaining under its share repurchase program. The company has more than $2.3 billion of capital left to be allocated for 2024 and 2025.
Constellation Energy 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’s ROA Higher Than Its Industry
CEG’s trailing 12-month return on assets (ROA) is 3.56%, ahead of the industry average of 3.51%. ROA is a financial ratio that measures how well a company uses its assets to generate profit. The current ROA of the company indicates that it is using its assets more efficiently than its peers.
Image Source: Zacks Investment Research
Constellation Energy’s Earnings Estimates Move Up
Courtesy of its strong year-to-date performance, Constellation Energy has raised its 2024 earnings per share guidance to $7.60-$8.40 from the prior mentioned $7.23-$8.03. The Zacks Consensus Estimate for CEG’s 2024 and 2025 earnings per share moved up 4.4% and 2.5%, respectively, in the last 60 days. The upward revisions in earnings estimates indicate analysts’ increasing confidence in the stock.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share of its peer NRG Energy (NRG - Free Report) moved down 9.5% and 10.5%, respectively, in the last 60 days.
Image Source: Zacks Investment Research
CEG Stock Trades at a Premium
The company is currently trading at a premium compared with its industry on a forward 12-month P/E basis.
Image Source: Zacks Investment Research
Summing Up
Constellation Energy is benefiting from the increasing demand for clean energy in its service territories, driven by the development of AI-driven data centers. CEG’s strong production capacity will allow it to meet the rising demand.
It is better to remain invested in this Zacks Rank #3 (Hold) stock and enjoy the benefits of dividends, share buybacks and rising earnings estimates.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.