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

Constellation Energy Corporation’s CEG shares have rallied 51.7% in three months compared with the Zacks Alternate Energy – Other industry’s growth of 28.2%. As the largest provider of carbon-free energy in the United States, CEG benefits significantly from its nuclear operations. Its nuclear fleet provides a reliable, stable and affordable source of electricity, while also contributing to environmental sustainability by producing zero-emission energy.
 

Another operator, Dominion Energy D, has gained 7.5% over the past three months. Dominion Energy operates multiple nuclear power stations, including Surry, North Anna and Millstone, which provide a significant portion of the electricity for its service areas. The company is also exploring advanced nuclear technologies like Small Modular Reactors (“SMR”). 

Is it a good time to add CEG stock to your portfolio now? Let's examine the factors that contributed to the share price gain in detail and assess the stock's investment prospects.

Positive Drivers for the CEG Stock

Constellation Energy’s strategic investment plans and focus on expanding its renewable portfolio drive its earnings performance. It expects capital expenditures of nearly $3 billion and $3.5 billion for 2025 and 2026, respectively. Nearly 35% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels.

Constellation Energy is an industry leader in safe, efficient and reliable operations of nuclear plants. Its nuclear fleet capacity factor was an impressive 94.1% in the first quarter compared with 93.3% in the year-ago period.

CEG’s robust nuclear infrastructure enables it to fulfill the increasing demand from power-intensive businesses, such as data centers. The company focuses on powering data centers "behind the meter" by co-locating and connecting them directly to existing nuclear energy generation facilities to avoid the need to transport power long distances over high-power transmission lines. This ensures that data centers have direct access to a reliable energy supply.

Constellation Energy expects more than 13% adjusted operating earnings growth on base earnings through 2030, driven by several factors, including the production tax credit step-up, planned refueling outages, outage duration improvements and nuclear generation.

CEG focuses on customer-driven initiative, which strengthens trust, enhances customer satisfaction, and positions Constellation Energy as a reliable, forward-thinking energy partner. This, in turn, drives long-term growth and value for both the company and its customers.

CEG Stock’s Earnings Estimates

The Zacks Consensus Estimate for 2025 earnings per share indicates a decrease of 1.05% and the same for 2026 implies an increase of 0.7% in the past 60 days. 
 

Another company, The Southern Company SO, is actively involved in the research, development and licensing of advanced nuclear reactors, including SMRs. Southern Company is also leading efforts to modernize the regulatory framework for advanced reactor licensing. The bottom-line estimate for 2025 indicates no change, while that for 2026 implies an increase of 0.22% in the past 60 days.

CEG’s Earnings Surprise History

The company’s earnings are consistent, visible and easy to calculate. It delivered an average earnings surprise of 7.41% in the last four reported quarters.
 

Dominion Energy beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 7.39%.

CEG’s Return on Equity Higher Than Industry

Constellation Energy’s trailing 12-month return on equity of 21.93% is better than the industry average of 8.41%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.

CEG’s Capital Return Program

Constellation Energy continues to enhance shareholder value through share repurchases and regular dividends. Since 2023, its board of directors has authorized the repurchase of up to $3 billion of the company's outstanding common stock. As of March 31, 2025, the company had approximately $841 million remaining authority to repurchase shares of its outstanding common stock.

CEG pays a quarterly dividend to its shareholders. The company aims to increase its annual dividend by 10%, subject to its board's approval. Check CEG’s dividend history here.

CEG Stock Trades at a Premium

Constellation Energy is currently trading at a premium compared to its industry on a forward 12-month P/E basis.
 

Southern Company is also trading at a premium compared with its industry’s P/E F 12M.

The Bottom Line

Constellation Energy has the opportunity to capitalize on the growing demand for clean energy across its service areas, primarily driven by the rapid expansion of AI-powered data centers, thanks to its robust generating capacity. CEG also benefits from customer-focused initiative, which helps it serve its customers more efficiently. 

Investors can hold onto this Zacks Rank #3 (Hold) stock at present and continue to enjoy the benefits of regular dividends and share repurchase programs. Given its premium valuation, new investors may want to wait for a better entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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