With a market cap of $71.5 billion, Baltimore, Maryland-based Constellation Energy Corporation (CEG) focuses on electricity generation and sales. The company provides natural gas, renewable energy, and other energy-related products across various U.S. regions, leveraging multiple power generation assets.
Shares of the electric utility company have significantly outperformed the broader market over the past 52 weeks. CEG stock has surged 90.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 35.5%. In 2024, shares of CEG are up 98.1%, compared to SPX's 25.5% gain on a YTD basis.
Looking closer, CEG has also outpaced the Utilities Select Sector SPDR Fund's (XLU) 32.6% return over the past 52 weeks and a 24.8% YTD gain.
Despite reporting better-than-expected Q3 adjusted EPS of $2.74, Constellation Energy's stock dropped 12.5% on Nov. 4, mainly due to concerns about regulatory risks tied to its nuclear power agreement with Microsoft. The Federal Energy Regulatory Commission (FERC) rejected a similar nuclear power deal for Talen Energy's Amazon data center, raising doubts about potential hurdles for Constellation's project. Additionally, the high valuation of Constellation’s stock, trading nearly 29 times the forecasted 2024 earnings with a low dividend yield, contributed to investor apprehension.
For the current fiscal year, ending in December, analysts expect CEG's EPS to grow 64.5% year-over-year to $8.24. The company's earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 11 “Strong Buy” ratings and seven “Holds.”
This configuration is slightly more bullish than three months ago, with 10 “Strong Buy” ratings on the stock.
On Nov. 7, Barclays reduced its price target for Constellation Energy to $270, while maintaining an “Overweight" rating on the shares following the company's Q3 earnings report.
As of writing, CEG is trading below the mean price target of $275.82. The Street-high price target of $342 implies a potential upside of 49.5%.
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