Constellation Energy Corporation CEG is trading above its 50-day and 200-day simple moving average (SMA), signaling a bullish trend. CEG continues to add clean energy to the grid through the efficient operation of nuclear plants and the extension of the lives of existing plants through new licenses.
Clean electricity demand is rising, and Constellation Energy’s ability to produce and supply a high volume of emission-free electricity from its nuclear plants will benefit the company.
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CEG's SMA Chart 50 and 200-day
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The 50-day and 200-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend of the stocks.
The CEG stock closed at $255.63 on Jan. 7, and in the past year, the company’s shares have gained 121% compared with the industry’s 76% rally. CEG has also outperformed the S&P 500’s growth of 28.6% and the Zacks Oil-Energy sector’s return of 10.8%.
CEG Stock’s Price Performance (One Year)
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Should you consider adding CEG to your portfolio only based on positive price movements? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add CEG stock to their portfolio.
Constellation Energy Gains From its Efficient Nuclear Fleet
Constellation Energy’s primary power production comes from its nuclear fleet, and it is well-positioned in terms of nuclear fuel. The company has created a diverse and resilient portfolio that can withstand the nuclear fuel supply disruption and has engaged in multiple long-term uranium supply contracts running well into the 2030s. These steps will ensure continued production from its nuclear fleet.
CEG’s fleetwide capacity factor has remained more than 94% over the past decade, or about 4% higher than the industry average. Demand for clean electricity produced by Constellation Energy is on the rise as it continues to support the system amid low production from renewable projects, even when demand is high.
CEG Stock Benefits From Rising Demand for Clean Energy
Constellation Energy is also benefiting from artificial intelligence (AI) and data center-driven clean power demand. Per a Business Insider report, major tech companies are going to invest nearly $1 trillion in data centers in the next five years. CEG can gain from rising clean energy demand from data centers as AI-driven data centers require more electricity than traditional data center racks.
CEG plans to make fresh investments in its nuclear fleet over the long term. The fresh investment will be directed to improve capacity in its existing nuclear power plants. Improvement in capacity at nuclear plants could add up to one gigawatt of new clean energy capacity over the next decade and assist the company in meeting the greater need for clean energy demand.
Another company, Vistra Corp. VST, with its immense nuclear power-driven electricity generation, is also benefiting from data center-driven clean power demand.
Constellation Energy’s Earnings Estimates Moving Up
The Zacks Consensus Estimate for CEG’s 2025 earnings per share moved to $9.16 per share, up 2.1% over the last 60 days. The upward revisions in earnings estimates indicate analysts’ increasing confidence in the stock.
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Constellation Energy Raises Shareholder Value
Constellation Energy continues to make share repurchases and has repurchased shares worth $1 billion year to date. It has $1 billion remaining under its share repurchase program. The company has more than $2.3 billion of capital left to be allocated for 2024 and 2025.
It pays a quarterly dividend to its shareholders. The company aims to increase its dividend by 10% annually, subject to its board's approval. Check CEG’s dividend history here.
CEG Returns Higher Than the Industry
Constellation Energy’s trailing 12-month return on equity of 16.26% is better than the industry average of 10.53%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.
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CEG Stock Trades at a Premium
Constellation Energy is currently trading at a premium compared with its industry on a forward 12-month P/E basis. CEG is trading at a P/E F12M of 27.84X compared with its industry average of 24.93X.
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Rounding Up
Constellation Energy is benefiting from the increasing demand for clean energy in its service territories, driven by the development of AI-driven data centers. CEG’s strong production capacity will allow it to meet rising demand.
Despite a premium valuation, the investors can consider adding this Zacks Rank #2 (Buy) stock in their portfolio, given rising earnings estimates, strong ROE and CEG management’s initiatives to increase shareholders’ value. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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