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Baltimore-headquartered Constellation Energy Corporation (CEG), spun off from Exelon (EXC) in 2022, is a powerhouse in carbon-free electricity generation. With a market cap of $69.7 billion, it has a growing portfolio of infrastructure and projects, excelling in hydrogen, nuclear, and wind power. Serving two million customers and 75% of Fortune 100 companies, Constellation's diverse portfolio supports data centers and flexible energy grids, making it a cornerstone of the renewable energy industry.
Shares of the renewable energy company have significantly outperformed the broader market over the past 52 weeks. CEG has surged by 176.8% over this time frame, while the broader S&P 500 Index ($SPX) rallied 28.9%. In 2024 alone, CEG stock rose 97.3%, compared to SPX's 11.2% gains on a YTD basis.
Zooming in further, CEG has outshined the S&P 500 Utilities Sector SPDR’s (XLU) 9.2% gains over the past 52 weeks.
CEG stock has outperformed the broader market over the past year, riding the "green wave" of clean energy demand. With significant nuclear capacity, Constellation Energy stands to benefit from the growing interest in zero-emissions power. CEG stock surged on May 9 as investors were also drawn to the company's strong Q1 earnings, further boosting the stock's appeal. This combination of green credentials and financial performance has made Constellation Energy a standout in the market.
The Goldman Sachs Group, Inc. (GS) spotlighted nuclear power's rising appeal, dubbing it "an attractive generation source for data centers given it is zero carbon and reliable." During the Q1 earnings call, Constellation Energy's management hinted at talks with "Magnificent Seven" members Microsoft Corporation (MSFT) and Alphabet Inc. (GOOGL) about teaming up on nuclear-powered data centers. This intriguing possibility grabbed investors' attention, fueling a surge in the stock price.
For the current fiscal year, ending in December, analysts expect CEG's EPS to grow by 48.3% to $7.43. The company's earnings surprise history is mixed. It beat consensus estimates in three of the last four quarters while missing on one other occasion.
Among the 11 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buys,” and four “Holds.”
This configuration has been consistent over the past months. However, it is slightly more bullish than three months before, with six “Strong Buy” ratings.
On May 20, Keybanc Capital Markets maintained an “Overweight” rating on the stock. This move highlights Constellation Energy’s strategic expansion to meet rising energy demand. Constellation Energy is boosting capacity by about 1 gigawatt through fleet upgrades, reopening closed plants, and partnering on small modular reactors.
Although the stock is currently trading at a premium to the mean price target of $210.20, the Street-high price target of $250, assigned by Wells Fargo & Company (WFC) in mid-May, represents a premium of just 8.4% to CEG's current levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
