Constellation Energy Corporation’s CEG shares have declined 15.5% over the past six months against the Zacks Alternative Energy - Other industry’s rally of 4%.
CEG’s operations can be impacted by price fluctuations of nuclear fuel, natural gas and oil used to operate most of its generating facilities. In addition, supply constraints, tariffs, counterparty defaults and geopolitical risks could hurt its operating results. The company is also exposed to Calpine acquisition-related leverage and share dilution.
Despite the weakness in share price, Constellation Energy continues to benefit from rising power demand, high-quality nuclear assets and long-term nuclear contracts.
Price Performance (Six Months)
Image Source: Zacks Investment Research
Another stock, Vistra Corp. VST, has multi-fuel power generation capabilities, with a significant volume of electricity production coming from nuclear power plants. Vistra’s shares also declined 13.8% in the past six months.
Given the current underperformance in price, should you consider adding Constellation Energy to your portfolio? Let's examine the factors in detail and assess the investment prospects.
CEG Stock Gets Support From Tailwinds Amid Price Weakness
Constellation Energy is benefiting from rising clean-energy demand through the diversified generation portfolio, led by its extensive nuclear fleet. Its nuclear assets achieved a 93% capacity factor in the second quarter of 2026, underscoring strong reliability and zero-carbon generation capabilities.
During the second quarter, the company signed 920 megawatts (MW) of long-term power purchase agreements (PPAs) for clean, reliable nuclear generation with a diverse set of investment-grade customers. Constellation Energy now expects roughly 30% of its baseload clean generation to be covered by long-term agreements by 2032.
The Calpine acquisition, completed in January 2026, broadened Constellation Energy’s generation and customer platform by adding natural gas, oil, geothermal, battery storage and solar assets. Second-quarter 2026 adjusted operating earnings benefited from Calpine accretion, indicating that the acquired business is already contributing to operating results.
Constellation Energy continues to increase output from existing assets through uprates, repowering and targeted renewable investment. Its previously announced $350 million wind initiative is intended to extend asset lives and increase generation without expanding the land footprint. The Calpine platform also adds geothermal, solar and battery capabilities to the generation mix.
Headwinds for Constellation Energy
The company is exposed to operational and regulatory risks associated with its extensive nuclear generation portfolio, including unplanned outages, maintenance requirements, fuel-supply challenges and potential policy changes.
Constellation Energy ended the second quarter of 2026 with an Equivalent Forced Outage Factor of 6.2%, compared with 4.5% at the end of first-quarter 2026, indicating a sequential increase in forced outage levels. The increase in forced outages can be attributed to the assets added to CEG’s generation fleet after the Calpine acquisition.
Constellation Energy’s Earnings Estimates
The Zacks Consensus Estimate for Constellation Energy’s 2026 earnings per share moved up 2.79%, while the same for 2027 indicates a decline of 5.41% in the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Vistra Energy’s 2026 and 2027 earnings per share indicates a decline of 3.66% and 6.17%, respectively, in the past 60 days.
CEG’s Debt Usage Is Higher Than Industry Peers
Utility operations are capital-intensive, and the companies operating in this space need to borrow from the market to fund their long-term projects. Companies borrow when their internal sources of funds are not sufficient to fulfill the long-term requirement.
The debt-to-capital of Constellation Energy is 43.3% compared with its industry’s 42.6%. The ratio indicates CEG is utilizing marginally higher debt compared with its peers to run operations.
Image Source: Zacks Investment Research
NextEra Energy NEE generates a substantial amount of clean energy and continues to expand its generation portfolio with additional clean energy resources. However, the company relies on debt to support its operations, with a debt-to-capital ratio of 61.8%, above the industry average.
CEG Stock Returns Higher Than the Industry
Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than peers.
Constellation Energy’s trailing 12-month ROE of 14.89% is better than the industry average of 7.14%.
Image Source: Zacks Investment Research
NextEra Energy’s ROE is 12.28%, which is also better than its industry average.
CEG Stock Trading at a Discount
Constellation Energy is currently trading at a forward 12-month P/E basis (P/EF12 M) of 20.25X, a discount compared with its industry’s 22.85X on P/EF12 M.
Image Source: Zacks Investment Research
Summing Up
Constellation Energy is positioned to benefit from rising clean-energy demand across its service territories. The company’s diversified generation portfolio supports its ability to meet increasing power needs reliably and efficiently.
The solid ROE and relatively attractive valuation support the investment case for this Zacks Rank #3 (Hold) stock. However, its higher debt usage compared with the industry and mixed earnings growth outlook suggest that prospective investors may prefer to wait for a more favorable entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This innovative software-as-a-service firm upped its user base +22% year over year. That rate is increasing and margins are expanding as AI efficiencies take effect. Of course, all our elite picks aren't winners, but this one could far surpass earlier Zacks' Stocks Set to Double like D-Wave Quantum, which shot up +680.1%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Constellation Energy Corporation (CEG): Free Stock Analysis Report
NextEra Energy, Inc. (NEE): Free Stock Analysis Report
Vistra Corp. (VST): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).