Constellation Energy's (CEG +1.98%) stock is off to a rough start in January. As of market close on Jan. 16, the power company had dropped to $307. This is more than $100 below its 52-week high, which the stock reached in October 2025. Should investors purchase Constellation Energy while it's below $310? Let's dive in deeper.
NASDAQ: CEG
Key Data Points
A volatile ride for investors
This stock may have gotten ahead of itself toward the end of last year. The surge in Constellation Energy's price was mainly due to hype surrounding the artificial intelligence (AI) boom and its insatiable appetite for power. Investors got excited, and the price skyrocketed.
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The volatility of Constellation stock lately is akin to that of a tech company and unlike the steadiness of a traditional utility business. In the past year, the stock has swung wildly, ranging from a low of $161 to over $400. Income investors, who generally invest in utilities for stability, may not have bargained for this wild a ride.
Still, the stock's dividend has steadily increased each year for the past few years. In 2025, the annual dividend reached $1.55 per share. This is a modest yield of about 0.5%. I would anticipate the dividend will continue to increase so long as Constellation can capitalize on expanding power needs in the U.S., Canada, and the U.K., where it operates.
Constellation also just completed the acquisition of Calpine Corporation on Jan. 7. According to the company, this is expected to add about $2 billion of annual free cash flow. Over the long term, this should help the company satisfy income investors who want to see strong cash positions and low debt. Constellation, impressively, currently carries no debt on its balance sheet.
The company has a few other tailwinds in the form of electricity demand from AI and data centers, as well as broader electrification needs. AI leaders like Jensen Huang have given nuclear a nod as a necessary part of the AI revolution. This is great news for Constellation, which operates the largest U.S. nuclear fleet.
Constellation is still slightly expensive
The forward price-to-earnings (P/E) ratio is high compared to other utility companies. The stock's forward P/E is 27 as of Jan. 20, whereas NextEra Energy stands at 21 and Vistra at a low 17. Constellation's earnings per share, though, are the highest of the group.
Constellation's stock is expensive relative to its broader energy peers and pays only a modest dividend at the moment. I still think the current price in the low $300s is too high to buy. If the stock continues to drop into the mid-$200s, it would warrant a second look.
