CEG vs. D: Which Energy Stock Has Better Long-Term Upside Potential?
The rapid expansion of AI-driven data centers, urbanization, industrial activity and electric vehicle adoption is driving a sharp increase in electricity demand. Against this backdrop, nuclear energy is gaining importance as a reliable source of clean power. Its high-capacity factor and zero operational emissions allow nuclear plants to deliver continuous electricity, unlike weather-dependent renewable sources such as solar and wind.
Nuclear power can generate large volumes of carbon-free electricity while using significantly less land than many other clean energy sources. It also follows established processes for managing and storing nuclear waste. As nuclear energy gains a larger role in the global power generation mix, nuclear-focused companies such as Constellation Energy Corporation CEG and Dominion Energy Inc. D are drawing increased investor attention.
Constellation Energy benefits from its leading position in clean and reliable nuclear generation. Its extensive nuclear fleet provides steady baseload power, positioning the company to capitalize on rising electricity demand from data centers, electrification and decarbonization initiatives. Strategic acquisitions have expanded its operating scale and customer base, while continued capital investments support plant reliability and efficiency. Long-term power purchase agreements also provide greater revenue visibility and support sustainable growth.
Dominion Energy is similarly positioned to benefit from rising demand for clean and dependable electricity. Its nuclear fleet provides carbon-free baseload power and supports grid reliability, while the company’s exploration of small modular reactors offers potential for additional scalable generation capacity. Continued investments in transmission and distribution infrastructure are strengthening system reliability and supporting regulated rate base growth. At the same time, rapid commercial load growth, particularly from data centers across its service territories, is creating additional demand opportunities.
With both companies operating substantial clean-energy portfolios and benefiting from rising electricity demand, comparing their fundamentals can provide greater insight into how CEG and D currently stack up as investment options.
CEG & D’s Earnings Estimates
The Zacks Consensus Estimate for Constellation Energy’s 2026 and 2027 earnings per share indicates year-over-year growth of 29.82% and 8.76%, respectively.
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The same for Dominion Energy’s 2026 and 2027 earnings per share implies year-over-year growth of 4.97% and 6.21%, respectively.
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Return on Invested Capital
Return on Invested Capital (“ROIC”) measures how efficiently a company uses invested capital to generate profits. A higher ROIC generally indicates stronger capital allocation, competitive advantages and greater potential for long-term value creation.
CEG’s current ROIC is 5.4%, higher than D’s 2.62%.
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Long-Term Debt to Capital
Companies involved in utility services are capital-intensive, as large amounts of funds are required to develop, maintain, upgrade and expand operations. The Fed rate has recently been raised 25 basis points to a range of 3.75-4%.
CEG’s long-term debt-to-capital currently stands at 37.16% compared with D’s 58.16%. It is evident Dominion Energy utilizes a much higher percentage of debt to run its operations compared with Constellation Energy.
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Valuation
Constellation Energy currently appears to be trading at a premium compared with Dominion Energy on a Price/Earnings Forward 12-month basis. (P/E- F12M).
CEG is currently trading at 20.29X, while D is trading at 16.17X.
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Price Performance
Constellation Energy’s shares have lost .0.2% in the past three months, while Dominion Energy’s share have declined 13.2%.
Price Performance (Three months)
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Summing Up
Constellation Energy is well positioned to serve rising data center power demand, supported by its extensive nuclear generation capacity, efficient operations and reliable electricity output. Likewise, Dominion Energy effectively leverages the nuclear fleet to meet growing demand, with nuclear power contributing a substantial share of its overall electricity generation.
Although Dominion Energy currently trades at a discounted valuation, Constellation Energy’s favorable earnings estimate revisions, relatively lower reliance on debt, and stronger return on invested capital make it a more attractive choice in the energy space.
Even though both stocks currently carry a Zacks Rank #3 (Hold), considering the aforementioned factors, Constellation Energy is our choice over Dominion Energy.
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).
