Constellation Energy Soars: Analyzing Q3 Earnings and Stock Performance
Constellation Energy Corporation CEG has seen a notable increase of 6.9% in its shares following the announcement of its third-quarter 2024 results on November 4. The company recorded earnings of $2.74 per share, which exceeded the Zacks Consensus Estimate of $2.72 by 0.7%. This figure also reflects a significant year-over-year increase of 28.6% from last year’s earnings of $2.13.
On November 7, CEG stock closed at $241.59. Over the past year, the company’s shares have surged by 101.8%, compared to a 61% increase for the industry. Notably, CEG significantly outperformed the S&P 500’s growth of 39.8% and the Zacks Oil-Energy sector’s return of 13.7%.
CEG Price Performance in the Last Year
Image Source: Zacks Investment Research
Is this the right moment to add this alternative energy stock to your portfolio? We will delve into the details driving the stock’s increase, examine the latest earnings results, and assess the stock’s overall investment potential.
Key Highlights from CEG’s Third Quarter Earnings
In the third quarter, Constellation Energy reported revenues of $6.6 billion, surpassing the Zacks Consensus Estimate of $6.21 billion by 5.5%. This represents a 7.2% increase compared to last year’s $6.11 billion.
During this quarter, CEG established a 20-year power purchase agreement with Microsoft Corporation MSFT to facilitate the restart of Three Mile Island Unit 1, now known as the Crane Clean Energy Center, which was shut down in 2019 due to economic factors. Under this agreement, Microsoft will purchase the electricity generated by the revamped plant to power its data centers in the PJM region with clean energy.
Excluding the Salem and South Texas Project (STP) Generating Stations, CEG’s nuclear plants achieved a 95.0% capacity factor in Q3 2024, down from 97.2% in Q3 2023. This decrease is attributed to more planned refueling outages compared to the previous year.
CEG’s commercial team continued to add value by optimizing operations across generation and load management, leading the company to adjust its full-year operating earnings guidance to a range of $8.00 – $8.40 per share, an increase from the previous guidance of $7.60 – $8.40 per share.
CEG’searnings Performance History
CEG’s earnings have shown consistency and transparency, with expectations for ongoing growth driven by organic developments, Price-Taker Credits (PTC) inflation, and stock buybacks. Impressively, the company has achieved positive earnings surprises in each of the last three quarters.
Image Source: Zacks Investment Research
Factors Benefiting CEG Stock
Constellation Energy primarily generates power through its nuclear fleet and is well-equipped regarding nuclear fuel procurement. The company has developed a diverse energy portfolio that can endure supply disruptions, such as those from Russia. Long-term uranium supply contracts extending into the 2030s further strengthen its production capabilities.
Moreover, CEG is positioned to take advantage of a surge in clean power demand, particularly from AI-driven data centers. According to Business Insider, major technology firms plan to invest nearly $1 trillion in data centers over the next five years. As AI technology demands more electricity, CEG stands to benefit from this increasing requirement for clean energy.
Operating nuclear power generation units positions Constellation Energy favorably. These facilities can deliver carbon-free energy reliably, even during extreme weather, and can operate for extended periods without refueling, making them ideal for supporting the growing energy requirements of AI-driven data centers.
Positive Movement in CEG’s Earnings Estimates
In the past month, the Zacks Consensus Estimate for CEG’s earnings per share in 2024 and 2025 has increased by 2.5% and 0.8%, respectively. These upward revisions are indicative of analysts’ growing confidence in the stock’s future performance.
Image Source: Zacks Investment Research
Over the trailing twelve months, Constellation Energy has achieved a return on equity of 16.26%, surpassing the industry average of 12.54%. This return on equity measure indicates how effectively the company utilizes shareholders’ funds to generate profit.
Image Source: Zacks Investment Research
In 2024, CEG has repurchased $1 billion of its shares in the first nine months of the year and has an additional $1 billion remaining under its buyback program. The company also has over $2.3 billion of capital available for allocation in 2024 and 2025.
CEG consistently pays dividends and aims for a 10% increase annually, based on board approval. The dividend history can be accessed for detailed insights here.
Image Source: Zacks Investment Research
CEG Stock Currently Trades at a Premium
Currently, Constellation Energy is trading at a premium in comparison to its industry based on a forward 12-month price-to-earnings (P/E) ratio.
Image Source: Zacks Investment Research
Conclusion
Constellation Energy is well-positioned to capitalize on the rising demand for clean energy, especially within its service areas fueled by the expansion of AI-driven data centers. With strong capabilities in electricity production, the company has consistently recorded positive earnings surprises over recent quarters.
Investors currently holding this Zacks Rank #3 (Hold) stock are encouraged to retain it in their portfolio and benefit from potential dividends, share buybacks, and positive earnings revisions.
You can explore the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Complimentary Offering: 5 Stocks to Watch as Infrastructure Spending Surges
Trillions of federal dollars are allocated to revamp and enhance America’s infrastructure. This significant funding will also benefit AI data centers, renewable energy projects, and more.
This resource highlights 5 surprising stocks poised to thrive from this emerging investment trend.
Download your free guide on how to benefit from the trillion-dollar infrastructure boom.
Stay updated with the latest recommendations from Zacks Investment Research. Today, you can download our report on 5 Stocks Set to Double at no cost.
Microsoft Corporation (MSFT): Free Stock Analysis Report
Constellation Energy Corporation (CEG): Free Stock Analysis Report
For more insights, click here to read this article on Zacks.com.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
