Introduction

Constellation Energy Corporation stands as a prominent American energy company specializing in electric power, natural gas, and energy management services. Serving approximately two million customers across the continental United States, Constellation has solidified its position as a key player in the nation’s energy sector.

Company History

The origins of Constellation Energy trace back to 1999 when Baltimore Gas and Electric Company (BGE) established it as a holding company. Over the years, Constellation expanded its operations, becoming a Fortune 500 company and one of the largest electricity producers in the United States. In 2012, a significant merger with Exelon Corporation occurred, leading to the rebranding of its energy supply business as Constellation, an Exelon company. This merger integrated Constellation’s extensive energy production capabilities with Exelon’s resources, enhancing its market presence.

A decade later, in 2022, Constellation Energy was spun off from Exelon, reestablishing itself as an independent entity. Former subsidiary Baltimore Gas & Electric remained part of Exelon. Since becoming independent, Constellation has grown and made headlines by, in September 2024, entering into a contract with Microsoft to restart the undamaged nuclear reactor at the Three Mile Island plant. The company is also planning to upgrade other existing reactor plants to provide more power.

In January 2025, Constellation agreed to acquire the natural gas and geothermal power provider Calpine for $16.4 billion ($26.6bn including debt) in a cash-and-stock deal. Approval of the purchase by state and federal regulators will be necessary.

Operations and Business Overview

Constellation Energy operates a diverse portfolio of energy assets, encompassing nuclear, natural gas, wind, solar, and hydroelectric power. With a total capacity of approximately 32,400 megawatts, the company generates enough energy to power 16 million homes and businesses. Notably, Constellation is the nation’s largest producer of carbon-free energy, contributing to 10% of all clean power on the U.S. grid. This diverse energy mix not only ensures reliability but also underscores the company’s commitment to sustainability.

Illustration 1: Constellation Energy logo symbolizing energy flow and commitment to sustainability.

Constellation Energy’s operation currently includes natural gas, nuclear energy, wind energy, hydro energy and solar energy. The company will probably also het into geothermal power after the aquisition of Calpine.

Customer Base and Energy Supply

Constellation Energy serves a wide range of customers, from residential users to large industrial corporations and government entities. Many Fortune 500 companies, including Amazon, Microsoft, and McDonald’s, have signed long-term power agreements with Constellation to secure 100% renewable energy for their operations.

Illustration 2: Constellation Energy Generating Cpacity breakdown

The largest energy source for Constellation in Nuclear energy. Constellation Energy is the largest producer of carbon-free electricity in the U.S., with 23 nuclear reactors across 14 sites producing about 21,000 megawatts (MW) of clean energy. Constellation’s nuclear fleet is primarily located in Illinois, Maryland, New York, and Pennsylvania. The company has heavily invested in extending the life of existing nuclear plants and is exploring small modular reactors (SMRs) as part of its future strategy. The company has heavily invested in extending the life of existing nuclear plants and is exploring small modular reactors (SMRs) as part of its future strategy.

While Constellation focuses on clean energy, natural gas-fired power plants remain an important part of its operations. The company has 6,000+ MW of natural gas capacity, making it one of the largest gas-fired power producers in the country, and it is its second largest energy source at the moment.

As part of its clean energy initiative, Constellation operates multiple large-scale wind and solar farms across the U.S. Constellation Energy also operates hydroelectric power plants, although this segment represents a smaller portion of its total energy mix.

Competitors and Competitive Advantage

In the competitive energy market, Constellation Energy faces competition from major providers such as Duke Energy, NextEra Energy, and Southern Company. Constellation’s competitive advantage lies in its diverse energy mix, substantial carbon-free energy production, and strategic partnerships. The company’s focus on renewable energy and innovative solutions positions it well to meet the evolving demands of the energy market.

Illustration 3: Constellation Energy is a big player in the Nuclear Energy Market

One of Constellation’s major competitive advantages is its nuclear energy infrastructure, which ensures stable, 24/7 clean energy compared to intermittent renewables like wind and solar. The company has also secured long-term energy contracts with major corporations like Amazon, Microsoft, and McDonald’s, providing a steady revenue stream. Additionally, Constellation is investing in carbon capture technology, hydrogen development, and smart grid innovations to stay ahead in the clean energy transition.

Community Engagement

Beyond its business operations, Constellation is deeply involved in community initiatives. The company ranks second in local corporate giving among Baltimore-based companies, donating $7.10 million in 2017. Additionally, Constellation provides grants to local schools that implement education programs promoting science and technology, reflecting its commitment to fostering education and community development.

Stock Analysis

Revenue and Profit

To assess a company’s true value and investment potential, analyzing its revenue and profits is a fundamental first step. It’s important to remember that a stock represents ownership in a real business, much like the small companies in your local community. If a small business owner approached you with an offer to buy their company, your first questions would likely be: “What’s the price?” and “How much does the company generate in revenue and profit each year?”

Beyond just current earnings, it’s crucial to examine the company’s financial performance over time. This helps determine whether recent profits are part of a consistent upward trend, or if they are temporary spikes or part of a larger decline. A long-term perspective ensures that an investment is based on sustainable growth rather than short-term fluctuations.

Illustration 4 and 5: Revenue of Constellation Energy from 2019 to 2023. Due to Constellation becoming an independent company from Exelon first in 2022, numbers for Constellation Energy is not available before 2019.

As illustrated in Figures 4 and 5, Constellation Energy’s revenue has shown a steady upward trend over the past five years. While this may not provide a long-term dataset for deep historical analysis, the consistent growth in revenue is a positive indicator that should not be overlooked by investors. A steadily increasing revenue stream suggests strong demand, effective business operations, and potential for future profitability. Moreover, this trend signals that the company is successfully expanding its market presence and capitalizing on industry growth opportunities, making it a promising prospect for long-term investors.

Revenue breakdown

Illustration 6: Revenue breakdown of Constellation Energy gathered from gurufocus.

As shown in Illustration 6, Constellation Energy’s revenue comes from a diverse range of sources, which is a positive sign for investors. A diversified revenue stream indicates that the company is not overly reliant on any single source of income, reducing risk and providing stability. However, it’s important to note that the company’s COGS (Cost of Goods Sold) eats up a significant portion of its revenue. This is a negative aspect, as high operating costs, particularly related to fuel and maintenance, eat into profitability. While it is common in the energy sector, the substantial impact of these costs means that a large chunk of revenue is absorbed by expenses, limiting the company’s ability to generate higher profits.

Net Income

Illustration 7 and 8: Net Income of Constellation Energy for the past five years. Due to Constellation becoming an independent company from Exelon first in 2022, numbers for Constellation Energy is not available before 2019.

Net income is a crucial metric to evaluate when determining whether a company is a worthwhile investment. It represents a company’s net profit or loss after accounting for all revenues, income items, and expenses, calculated as Net Income = Revenue – Expenses.

The Net Income of Constellation Energy raises a red flag, as it has not only remained at a low level but has also been negative at times, meaning the company’s expenses have exceeded its revenue. This suggests that Constellation has been operating at a loss in certain periods, which is concerning for potential investors. Negative net income indicates that the company is struggling to control costs or increase profitability, which could raise doubts about its financial health and ability to generate sustainable returns. It is crucial for investors to carefully monitor this trend, as ongoing losses could signal deeper operational or strategic issues that need to be addressed.

Earnings per Share (EPS)

Illustration 9: Earnings per share for Constellation Energy from 2019 to 2013. Due to Constellation becoming an independent company from Exelon first in 2022, numbers for Constellation Energy is not available before 2019.

Earnings Per Share (EPS) is a key financial metric that measures a company’s profitability on a per-share basis. It indicates how much profit a company generates for each outstanding share of its stock, and is used o assess a company’s financial health, profitability, and potential for growth. In other words this metric can tell us how profitable the business is. The EPS figure itself isn’t the primary focus for value investors—it can be 0.2 or 10, but what truly matters is the price-to-earnings (P/E) ratio and the company’s ability to generate consistent earnings growth. A steadily increasing EPS over time signals strong financial health, profitability, and long-term value creation.

For Constellation Energy, its EPS performance raises concerns, making it more of a red flag than a green one. Over the past few years, Constellation’s EPS has been inconsistent, with periods of negative earnings, indicating that the company has struggled with profitability. A fluctuating or negative EPS is a warning sign for investors, as it suggests unstable earnings and financial uncertainty. Ideally, long-term investors look for companies with a steadily growing EPS, as this signals strong financial health and increasing shareholder value—something Constellation has yet to demonstrate consistently.

Additionally, because Constellation operates in the capital-intensive energy sector, high costs related to fuel, maintenance, and infrastructure investments eat into its profits, making it difficult to maintain a strong EPS. Unless the company significantly improves its profitability, reduces its cost structure, or benefits from external factors like rising electricity prices, its EPS will remain a concern for investors looking for stability and long-term growth. While Constellation Energy has potential in the clean energy sector, its EPS performance suggests higher risk, making it less attractive for conservative, value-focused investors.

Assets and Liabilities

Illustration 10 and 11: Assets and Liabilities of Constellation Energy from 2019 to 2023. ue to Constellation becoming an independent company from Exelon first in 2022, numbers for Constellation Energy is not available before 2019.

When evaluating a company as a potential investment, understanding its assets and liabilities is crucial. If a local businesses offered to sell their shop to you —after determining revenue and profit—you would be asking about the business’s debt and the value of its assets. The same principle applies when assessing publicly traded companies like Constellation Energy.

The company’s assets have remained consistently high, fluctuating between $48-50 billion USD, which is a positive sign of financial stability. Notably, its total assets exceed its liabilities and debt, indicating a strong financial position and overall good financial health. This is generally a green flag for investors, as it suggests the company has a solid foundation to support its operations.

However, as illustrated in Figure 10, a concerning trend has emerged. Over the past five years, total liabilities and debt have steadily increased, while the company’s assets have remained stagnant. This shift is a negative signal, as it suggests that the company’s financial position has weakened over time. An increasing debt burden without corresponding asset growth raises questions about how efficiently the company is managing its finances and whether it is taking on too much risk.

Additionally, Constellation Energy’s cash on hand is at a worryingly low level, especially when compared to its rising debt. This is a red flag, as it indicates the company may not be adequately prepared to handle financial downturns, unexpected expenses, or economic uncertainties. A low cash reserve limits flexibility and could force the company to take on more debt or issue new shares in difficult times, potentially diluting shareholder value.

While the company remains financially stable for now, investors should closely monitor its rising debt levels and limited cash reserves, as these factors could impact long-term financial sustainability and overall risk exposure. The most important indicator when assessing a company’s financial health is Total Shareholder Equity, which is calculated as: Total Shareholder Equity=Total Assets−Total Liabilities. As can be seen from illustration 11, its total shareholder equity has gradually decreased because of rising liabiltities something that is a red flag for potential investors and should be closely monitored.

Debt to Equity Ratio

Illustration 12: The Debt to Equity Ratio of Constellation Energy from 2019 to 2014.

The Debt-to-Equity (D/E) ratio is a key financial metric used to assess a company’s financial leverage and risk. It measures how much debt a company uses to finance its operations relative to shareholder equity. A high D/E ratio (greater than 1.0) suggests that the company relies heavily on debt financing, which can amplify financial risk, particularly during economic downturns when debt obligations may become more difficult to manage. In contrast, a low D/E ratio (below 1.0) indicates that the company is primarily financed through equity rather than debt, reducing financial risk but potentially limiting rapid expansion. A negative D/E ratio, on the other hand, signals that a company has more liabilities than equity—often considered a warning sign for investors.

Constellation Energy has a high D/E which was 3.5 in 2024, and has generally been over 3 the past 5 years which is a very high level. Constellation Energy’s D/E ratio has remained at an elevated level, meaning that the company is more dependent on debt financing rather than funding growth through retained earnings or equity. This is particularly concerning because rising interest rates and economic downturns could make it harder for the company to manage its debt burden. If Constellation continues to accumulate liabilities while its equity remains stagnant or grows at a slower pace, it could lead to higher financial strain and potential difficulties in meeting debt obligations.

A high D/E ratio is not unusual for utility companies, as they often require significant capital investment for infrastructure, maintenance, and expansion. However, when compared to competitors, Constellation’s debt levels are on the higher side, making it a riskier choice for conservative investors.

Price to earnings ratio (P/E)

Illustration 13 and 14: P/E ratio for Constellation Energy from 2019 to 2025. The P/E ratio was negative for 2021 and 2022 as the EPS was negative.

For value investors, the most important metric when evaluating a stock is the price-to-earnings (P/E) ratio, which helps determine whether a company is undervalued or overvalued. if a company has outstanding financials, buying its stock at an excessively high price can lead to poor returns. To illustrate this, imagine a local barber shop that generates solid profits. If the owner offers to sell you the business for $1, it would be an incredible dery al. However, if he tries to sell it for $1 billion, no matter how successful the shop is, the price would be absurdly overvalued. The stock market operates in a similar way—companies can be cheaply priced on some days and highly expensive on others.

In the past couple of years the P/E ratio of Constellation has been around 23-24 which is average and suggest that the company is neither undervalued nor overvalued. However, the P/E ratio of 33,77 in January 2025 can be considered high. A high P/E ratio suggests that the company’s stock is priced at a premium relative to its earnings, indicating that investors expect substantial future growth. However, such expectations may not align with the company’s actual performance, especially considering Constellation Energy’s recent financial challenges, including inconsistent earnings and rising debt levels. It’s also important to note that Constellation Energy’s P/E ratio has experienced considerable volatility. For instance, at the end of 2022, the company had a negative P/E ratio of -177, reflecting periods of negative earnings. The P/E is a negative flag and suggest that the price is too high for valueinvestors.

Dividend

The company follows a quarterly dividend payment schedule. For instance, in 2024, dividends of $0.3525 per share were declared in February, May, July, and November, with corresponding ex-dividend dates and payment dates in the subsequent months. This regularity provides investors with a predictable income stream.

Constellation Energy has demonstrated a consistent increase in its dividend payouts over the past few years. Here’s a summary of the annual dividends per share:

  • 2024: $1.41
  • 2023: $1.128
  • 2022: $0.564

t’s important to note that Constellation Energy’s dividend yield remains relatively modest compared to industry averages. As of January 2025, the yield stands at 0.42%, which is lower than the typical yield for utility companies. The company’s dividend payout ratio stands at around 15.55%, suggesting that a modest portion of earnings is allocated to dividends, which may indicate potential for future increases.

In summary, Constellation Energy’s increasing dividends and consistent payment schedule are positive indicators for investors seeking stable returns. However, the yield is modest, and the company’s payout ratio is prudent. This reflects a strategy aimed at sustainable growth and financial stability, but is also bad news for dividend investors as the dividend for Constellation Energy is far lower compared to other utility companies and to the stock market as a whole.

Insider Trading

A crucial metric to consider when evaluating whether a company is worth investing in is insider trading activity—specifically, whether company insiders have been buying or selling shares over the past year. It’s particularly important to assess who has been trading, as directors should be monitored even more closely than officers.

As can be seen from the table below, there has been no selling by any insiders recently. This is a green flag for investors since it shows that insiders are confident in the company as they have not sold their shares.

Illustration 15: Most recent Constellation Energy Insider Trades

Other Company Info

As illustrated below, Constellation Energy currently employs approximately 13,871 individuals, reflecting a steady increase from 11,696 employees in 2021.The company was established in 1999 and, following a merger with Exelon in 2012, re-emerged as an independent entity in 2022 after a corporate spin-off. It is publicly traded on the NASDAQ stock exchange under the ticker symbol CEG. Operating within the Utilities sector, Constellation Energy is classified under the Multi-Utilities industry.The company has approximately 319 million shares outstanding and a market capitalization of around $95.453 billion USD.

Headquartered at 1310 Point Street, Baltimore, Maryland 21231, United States, Constellation Energy’s official website is http://www.constellationenergy.com.

Final Verdict

Constellation Energy offers an exciting opportunity for investors looking to gain exposure to nuclear and renewable energy. The company has secured high-profile business deals with Amazon and Microsoft and has contracts in place to expand its clean energy portfolio. With a strong commitment to sustainability and future-oriented investments, Constellation is well-positioned to benefit from the growing demand for carbon-free energy.

However, the company’s financial performance raises concerns. Both revenue and net income have fluctuated significantly over the past few years, and high COGS (Cost of Goods Sold) consumes a large portion of profits. Additionally, total shareholder equity has declined, as assets have remained stable while liabilities and debt have increased. These factors indicate potential financial instability and a lack of consistent profitability.

That said, it is crucial to consider that Constellation Energy only recently became an independent company, meaning the available financial data is somewhat limited. Moreover, rising liabilities are not uncommon for companies heavily investing in large-scale projects like nuclear and renewable energy. For growth-oriented investors who believe in the long-term potential of clean energy, Constellation Energy could be a compelling, albeit risky, investment. However, for value investors seeking a financially stable and undervalued company with strong past performance, Constellation Energy is not an ideal choice.