Constellation Energy (CEG +0.24%) is the country's largest producer of carbon-free energy. It's the leader in generating nuclear energy. Constellation also operates a mix of hydro, wind, and solar energy assets. It sells the power it produces to other utilities, commercial and industrial customers, and residential users.
The power company went public in February 2022 following its spinoff from utility Exelon. Here's a look at the nuclear energy company's returns over the past few years since its return to the public markets.
Image source: Getty Images.
Evaluating Constellation Energy's returns
Constellation Energy has produced powerful returns since going public in 2022:
|
One-year |
Three-year |
Since its spinoff in 2022 | |
|---|---|---|---|
|
Constellation Energy |
47.2% |
287.5% |
738% |
|
Constellation Energy (total return with reinvested dividends) |
47.9% |
296.7% |
765.7% |
|
S&P 500 |
12.8% |
69.9% |
50.6% |
Data source: Ycharts.
As the table shows, the power company's stock price return has absolutely crushed the broader market over the past one- and three-year periods as well as since its spin-off date.
Exelon initially acquired Constellation Energy in 2011 for $7.9 billion. However, it split apart more than a decade later to unlock shareholder value. Exelon retained the six fully regulated transmission and distribution utilities. Meanwhile, Constellation held the power generation and competitive energy business.
NASDAQ: CEG
Key Data Points
Given the returns of Constellation over the past few years, the separation has certainly unlocked shareholder value.
What has powered Constellation Energy's returns?
Constellation Energy has benefited from a resurgence in demand for nuclear energy since its separation from Exelon. Surging power demand from AI data centers has driven technology companies to lock up power supplies, including signing long-term power purchase agreements (PPAs) with Constellation for its nuclear power.
Microsoft signed a 20-year PPA with Constellation Energy in September 2024 for 100% of the future power generated by the former Three Mile Island Unit 1 reactor during that period. Constellation previously shut down that unit in 2019 for economic reasons. However, it will now restart the reactor by 2028 to support Microsoft's power needs. Microsoft is reportedly paying a huge premium for this power.
Constellation Energy signed another 20-year PPA with Meta Platforms this past June for most of the power produced at its Clinton Clean Energy Center starting in mid-2027. The company nearly shut down this plant in 2017 due to years of financial losses. However, the Future Energy Jobs Act prevented its early retirement by providing economic support through the middle of 2027. Meta's deal will allow the plant to continue operating for decades to come.
The company also agreed to acquire fellow power producer Calpine in a $26 billion deal earlier this year. The transaction will significantly increase its scale, diversify its operations, and boost its earnings. Calpine is a leader in natural gas and geothermal power.
These and other catalysts have Constellation Energy on track to deliver more than 10% annual earnings-per-share growth through 2028.
Constellation Energy has performed very well
Constellation Energy has produced high-powered total returns since its spinoff from Exelon a few years ago. It's growing its earnings at a high rate, which should continue for the next several years. That positions the company to potentially continue producing robust returns in the future.
