Constellation Energy Corporation’s (CEG – Free Report) long-term investments and focus on renewable energy help boost its performance. The company’s position as an industry leader in the safe operation of nuclear plants helps it increase its nuclear output.
However, this Zacks Rank #3 (Hold) company faces risks related to non-performance of its suppliers and variation in weather conditions.
Tailwinds for Constellation Energy
CEG’s strategic investment plans and focus on continuing to expand its renewable portfolio drive its earnings performance. The company expects nearly $5.1 billion of capital expenditures through 2025. Almost 45-47% of the projected capital expenditure is for acquiring nuclear fuel, which includes additional nuclear fuel to increase inventory levels.
Constellation Energy is an industry leader in operating nuclear plants safely, efficiently and reliably. Its nuclear fleet capacity factor was an impressive 94.6% in the first nine months of 2024 compared with 94.1% in the year-ago period. This indicates continued strong production throughout 2024.
The company expects to increase nuclear output by 160 megawatts (MW) at Byron and Braidwood, with investments of $800 million through 2029 for required low-pressure turbine replacements. It also expects investments of $350 million through 2025 for 315 MW in the initial scope of the wind repowering program. Nearly 90% of Constellation Energy’s annual energy output comes from carbon-free sources and the company has set a goal to produce 95% carbon-free electricity by 2030 and 100% by 2040.
Headwinds for CEG
Constellation Energy engages a diverse set of suppliers to ensure that it can secure the nuclear fuel needed to continue operating its nuclear fleet in the long term. Non-performance by these suppliers could have a material adverse impact on the company’s consolidated financial statements.
Seasonal factors and weather variability influence the company’s operating results. If the summer or winter weather differs from expectations, CEG could need more resources to fulfill its contractual obligations.
CEG Stock Price Movement
In the past year, shares of the company have risen 115.7% compared with the industry’s growth of 61.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same industry are Clearway Energy (CWEN – Free Report) , Gevo (GEVO – Free Report) and ReNew Energy Global (RNW – Free Report) , each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CWEN’s long-term (three to five year) earnings growth rate is 26.8%. The Zacks Consensus Estimate for CWEN’s 2025 sales indicates an increase of 9.3% year over year.
The Zacks Consensus Estimate for GEVO’s 2024 earnings per share (EPS) indicates a decrease of 17.9% year over year. The Zacks Consensus Estimate for 2025 EPS indicates year-over-year growth of 24.2%.
The Zacks Consensus Estimate for RNW’s fiscal 2025 EPS indicates an increase of 25% year over year. The company delivered an average earnings surprise of 15.5% for the trailing four quarters.
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