Constellation Energy Rises 51.7% in 3 Months: How to Play the Stock?

Core Viewpoint - Constellation Energy Corporation (CEG) has experienced a significant share price increase of 51.7% over the past three months, outperforming the Zacks Alternate Energy – Other industry's growth of 28.2%, primarily due to its strong nuclear operations [1][8]. Group 1: Company Performance - CEG's nuclear fleet provides a reliable, stable, and affordable source of electricity, contributing to environmental sustainability by producing zero-emission energy [1]. - The company expects capital expenditures of nearly $3 billion for 2025 and $3.5 billion for 2026, with approximately 35% allocated for the acquisition of nuclear fuel to increase inventory levels [4][8]. - CEG's nuclear fleet capacity factor was 94.1% in the first quarter, an improvement from 93.3% in the previous year [5]. Group 2: Market Position and Strategy - CEG is focusing on powering data centers directly from its nuclear energy generation facilities, which helps avoid costly long-distance power transmission [6][9]. - The company anticipates more than 13% adjusted operating earnings growth on base earnings through 2030, driven by factors such as production tax credits and improvements in outage durations [9]. Group 3: Financial Metrics - CEG's trailing 12-month return on equity stands at 21.93%, significantly higher than the industry average of 8.41%, indicating effective utilization of shareholders' funds [16]. - The Zacks Consensus Estimate for 2025 earnings per share indicates a decrease of 1.05%, while the estimate for 2026 implies a slight increase of 0.7% over the past 60 days [11]. Group 4: Shareholder Value - CEG has authorized a share repurchase program of up to $3 billion, with approximately $841 million remaining as of March 31, 2025 [18]. - The company aims to increase its annual dividend by 10%, subject to board approval, and pays a quarterly dividend to its shareholders [19]. Group 5: Valuation - CEG is currently trading at a premium compared to its industry on a forward 12-month P/E basis, indicating a higher valuation relative to peers [20].