How Should You Play Constellation Energy Stock Post Q2 Earnings Beat?

Constellation Energy Corporation’s CEG second-quarter earnings of $1.91 per share surpassed the Zacks Consensus Estimate of $1.83 by 4.4%. The bottom line improved 13.7% from the year-ago quarter’s figure of $1.68.The stock closed at $327.63 on Aug. 13. However, in the year-to-date period, shares have gained 46.5% compared with the industry’s 34.3% rally. CEG has also outperformed the S&P 500’s rise of 9.5% and the Zacks Oil-Energy sector’s growth of 1.7% during the same period. Image Source: Zacks Investment ResearchIs it a good time to add this alternate energy stock to your portfolio? To find an answer to this, let's examine the key factors behind the share price hike, review CEG’s second-quarter results and assess the investment prospects.Key Highlights of CEG’s Q2 Earnings ReleaseRevenues totaled $6.1 billion, which surpassed the Zacks Consensus Estimate of $5.06 billion by 20.5%. The top line also increased 11.3% from the year-ago figure of $5.48 billion.Constellation Energy signed a 20-year power purchase agreement with Meta (for the full output of the Clinton Clean Energy Center) to support the latter’s clean energy goals and operations. The agreement, beginning June 2027, will support the relicensing and continued operations of the Clinton nuclear facility for another two decades and allow CEG to expand Clinton’s clean energy output by 30 megawatts through plant uprates.CEG received regulatory approval from the New York State Public Service Commission, the Public Utility Commission of Texas and the Federal Energy Regulatory Commission for its acquisition of Calpine. CEG continues to expect this transaction to be closed in the fourth quarter of 2025.The company’s nuclear fleet, including its owned output from the Salem and South Texas Project Generating Stations, produced 45,170 gigawatt-hours (GWhs) compared with 45,314 GWhs in the second quarter of 2024.Excluding the Salem and South Texas Project Generating Stations, CEG’s nuclear plants at ownership achieved a 94.8% capacity factor for the second quarter of 2025 compared with 95.4% for the second quarter of 2024.Constellation Energy’s Earnings Surprise HistoryConstellation Energy beat on earnings in each of the trailing four quarters, delivering an average surprise of 4.13%. Image Source: Zacks Investment ResearchAnother company, Vistra Corp. VST, reported second-quarter earnings on Aug. 7. It reported earnings of $1.01 per share, which beat the Zacks Consensus Estimate of 98 cents by 3.1%. During the quarter, VST received approval to extend operations of its 1,268-MW Perry Nuclear Power Plant for an additional 20 years, through 2046. Vistra beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 69.8%.Factors Backing CEG Stock’s PerformanceConstellation Energy operates a very large fleet of nuclear power plants, which are a crucial part of the country's carbon-free energy generation. These plants have high-capacity factors, meaning they consistently operate at or near their maximum output.The company is also benefiting from wholesale energy markets by leveraging its diverse clean energy portfolio, primarily nuclear units and expertise in energy trading and risk management. This allows it to meet the growing demand for clean energy and provide innovative solutions to customers, ultimately driving revenue growth and profitability.Constellation Energy is actively investing in and developing renewable energy sources like wind and solar, including initiatives like Constellation Offsite Renewables, which provides businesses with access to offsite renewable energy projects.CEG’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 allocated to the acquisition of nuclear fuel, which includes additional nuclear fuel to replenish inventory levels.Constellation Energy is taking advantage of the rising demand from data centers by using its current fleet of nuclear power generators and strategic initiatives like the Production Tax Credit. The company has been striking deals with major tech companies like Microsoft to supply power to their data centers, demonstrating a strategic focus on this growing market.The company positions itself to prosper in a changing energy market that is focused on sustainability by striking a balance between investments in growing into renewables and keeping its leading nuclear capabilities.Constellation Energy’s Earnings EstimatesThe bottom-line estimate has decreased 0.11% and increased 2.95% for 2025 and 2026, respectively, in the past 60 days. Image Source: Zacks Investment ResearchAnother company, Dominion Energy’s D focus on Small Modular Reactors positions the company for growth in the nuclear energy sector, particularly as demand for carbon-free energy increases. The bottom-line estimate has remained unchanged for 2025 and increased 0.28% for 2026 in the past 60 days.CEG Stock Returns Higher Than the IndustryConstellation Energy’s trailing 12-month return on equity of 21.61% is better than the industry average of 8.39%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income. Image Source: Zacks Investment ResearchCEG Stock Trades at a PremiumConstellation Energy is currently trading at a premium compared with its industry on a forward 12-month P/E basis. Image Source: Zacks Investment ResearchVistra and Dominion Energy are also trading at a premium compared to their industry on a forward 12-month P/E basis.CEG Rewards Shareholders Through Buybacks and DividendsSince 2023, CEG’s board of directors has authorized the repurchase of up to $3 billion of the company's outstanding common stock. As of June 30, 2025, there was approximately $540 million of remaining authority to repurchase shares of the company's outstanding common stock.CEG aims to increase its dividend by 10% annually, subject to its board's approval. Its quarterly dividend is 38.78 cents per share at present, resulting in an annualized dividend of $1.55 per share. Check CEG’s dividend history here.Summing UpConstellation Energy stands to benefit from the rising demand for clean energy in its service areas, strategic investments and expansion of its renewable portfolio. CEG should be able to meet the growing demand, thanks to its robust production capacity. Investors may hold onto this Zacks Rank #3 (Hold) stock at the moment and enjoy the benefits of regular dividends and share repurchases. Given its premium valuation, new investors can wait and look for a better entry point.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want 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 Dominion Energy Inc. (D): Free Stock Analysis Report Vistra Corp. (VST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks