CEG
CEG
Accumulate 2026-05-07
Model
DCF
Price at Report
$311.28
Base IV
$308.24
Bear IV
$202.89
Bull IV
$494.45
Entry Zone: 193-284 · Sell Above: 420
Bore Family Office
Valuation Report — Constellation Energy Corporation (CEG) • May 7, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.50% • Current Price: $311.28
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Constellation Energy Corporation (CEG) is the largest producer of carbon-free energy in the United States, operating the nation's largest nuclear fleet with nearly 19 GW of capacity across 14 nuclear plants and 21 reactors. The company serves approximately 2 million customers across the Mid-Atlantic, Midwest, New York, and Texas (ERCOT) regions.
In September 2024, Constellation signed a landmark 20-year Power Purchase Agreement (PPA) with Microsoft to restart Three Mile Island Unit 1 — renamed the Crane Clean Energy Center — providing 835 MW of dedicated baseload nuclear power for Microsoft's AI data center operations. This deal represents the largest PPA in Constellation's history and validates the emerging nuclear-for-AI thesis.
The company generates virtually 100% clean energy from nuclear, wind, solar, and hydro assets, positioning it as the premier provider of 24/7 firm clean power to hyperscalers and data center operators who require round-the-clock baseload electricity that intermittent renewables cannot provide.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Mid-Atlantic | $8,300M | 33% | +10.0% | 22.0% | Largest region; includes TMI restart |
| Midwest | $7,100M | 28% | +6.0% | 19.0% | Stable regulated & competitive markets |
| New York | $4,500M | 18% | +5.0% | 17.0% | FitzPatrick & Nine Mile Point nuclear |
| ERCOT & Other | $3,700M | 14% | +15.0% | 13.0% | Texas growth market; higher volatility |
| Corporate & Other | $1,933M | 7% | +3.0% | -2.0% | Intersegment eliminations, hedging |
| Blended Growth Rate | — | 100% | +8.2% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 6.5% | <8% weak |
| FCF Margin | 11.8% | ≥10% strong |
| Debt / EBITDA | 1.6x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($M) | $24,440 | $24,918 | $23,568 | $25,533 |
| Rev YoY Growth | — | +2.0% | -5.4% | +8.3% |
| Gross Margin | 8.7% | 13.0% | 25.4% | 18.4% |
| EBITDA ($M) | $2,922 | $4,124 | $7,052 | $5,687 |
| EBITDA Margin | 12.0% | 16.6% | 29.9% | 22.3% |
| Operating Income ($M) | $495 | $1,610 | $4,352 | $3,086 |
| Operating Margin | 2.0% | 6.5% | 18.5% | 12.1% |
| Net Income ($M) | $-160 | $1,623 | $3,749 | $2,319 |
| Net Margin | -0.7% | 6.5% | 15.9% | 9.1% |
| EPS (diluted) | $-0.49 | $5.01 | $11.89 | $7.40 |
| Free Cash Flow ($M) | $-4,042 | $-7,723 | $-5,029 | $1,288 |
| Annual DPS | $0.564 | $1.128 | $1.410 | $1.551 |
| Total Debt ($M) | $5,768 | $9,261 | $8,412 | $8,992 |
💹 Capital Return & Share Count Analysis
Net Share Change
-5.0% (2022→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2022 | 329.0M | — | — | — |
| 2023 | 324.0M | -1.5% | $300 | 0.3% |
| 2024 | 315.0M | -2.8% | $800 | 0.8% |
| 2025 | 312.4M | -0.8% | $600 | 0.6% |
Constellation has been steadily reducing shares outstanding — from 329M in 2022 to 312M in 2025, a 5.2% reduction. The company targets $1B+ in annual share repurchases. Combined with a growing dividend ($1.551/share FY2025, ~0.50% yield), total shareholder return is attractive. The low dividend yield reflects the growth-oriented capital allocation: prioritizing buybacks and nuclear reinvestment over high payouts.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.800 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 8.65% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 5.10% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.82% | × (1 − 25%) |
| Weight Equity (We) | 91.5% | Mkt cap $0.0B |
| Weight Debt (Wd) | 8.5% | Gross debt $0.0B |
| WACC | 7.50% | DCF discount rate |
📈 DCF Scenarios
$203
🔴 Bear
$308
📊 Base
$494
🚀 Bull
$311.28
Current Price
$381
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 5.0% | 3.0% | 2.5% | 7.50% | $203 | ▼34.8% |
| 📊 Base | 10.0% | 6.0% | 3.0% | 7.50% | $308 | ▼1.0% |
| 🚀 Bull | 15.0% | 8.0% | 3.5% | 7.50% | $494 | ▲58.8% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 5.0% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.15B | $2.93B | $2.93B |
| Year 2 ✦ | Stage 1 | $3.30B | $2.86B | $5.79B |
| Year 3 ✦ | Stage 1 | $3.45B | $2.78B | $8.56B |
| Year 4 ✦ | Stage 1 | $3.60B | $2.70B | $11.26B |
| Year 5 ✦ | Stage 1 | $3.75B | $2.61B | $13.87B |
| Year 6 | Stage 2 | $3.86B | $2.50B | $16.37B |
| Year 7 | Stage 2 | $3.98B | $2.40B | $18.77B |
| Year 8 | Stage 2 | $4.10B | $2.30B | $21.07B |
| Year 9 | Stage 2 | $4.22B | $2.20B | $23.27B |
| Year 10 | Stage 2 | $4.35B | $2.11B | $25.38B |
| Terminal | — | TV=$89.1B | PV(TV)=$43.2B (63% of EV) | EV=$68.6B |
| Intrinsic Value | — | — | EV $68.6B − Net Debt → Equity / Shares | $203 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $89.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $43.2B). Enterprise Value = PV of FCFs ($25.4B) + PV of TV ($43.2B) = $68.6B. Subtracting net debt gives equity value of $63.4B, divided by shares outstanding = $203 per share.
Base Scenario
Stage 1: 10.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.30B | $3.07B | $3.07B |
| Year 2 ✦ | Stage 1 | $3.65B | $3.16B | $6.23B |
| Year 3 ✦ | Stage 1 | $4.00B | $3.22B | $9.45B |
| Year 4 ✦ | Stage 1 | $4.35B | $3.26B | $12.71B |
| Year 5 ✦ | Stage 1 | $4.70B | $3.27B | $15.98B |
| Year 6 | Stage 2 | $4.98B | $3.23B | $19.21B |
| Year 7 | Stage 2 | $5.28B | $3.18B | $22.39B |
| Year 8 | Stage 2 | $5.60B | $3.14B | $25.53B |
| Year 9 | Stage 2 | $5.93B | $3.09B | $28.62B |
| Year 10 | Stage 2 | $6.29B | $3.05B | $31.68B |
| Terminal | — | TV=$144.0B | PV(TV)=$69.9B (69% of EV) | EV=$101.5B |
| Intrinsic Value | — | — | EV $101.5B − Net Debt → Equity / Shares | $308 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $144.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $69.9B). Enterprise Value = PV of FCFs ($31.7B) + PV of TV ($69.9B) = $101.5B. Subtracting net debt gives equity value of $96.3B, divided by shares outstanding = $308 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 15.0% | Stage 2: 8.0% | Terminal: 3.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.45B | $3.21B | $3.21B |
| Year 2 ✦ | Stage 1 | $4.00B | $3.46B | $6.67B |
| Year 3 ✦ | Stage 1 | $4.70B | $3.78B | $10.45B |
| Year 4 ✦ | Stage 1 | $5.50B | $4.12B | $14.57B |
| Year 5 ✦ | Stage 1 | $6.40B | $4.46B | $19.03B |
| Year 6 | Stage 2 | $6.91B | $4.48B | $23.51B |
| Year 7 | Stage 2 | $7.46B | $4.50B | $28.01B |
| Year 8 | Stage 2 | $8.06B | $4.52B | $32.53B |
| Year 9 | Stage 2 | $8.71B | $4.54B | $37.07B |
| Year 10 | Stage 2 | $9.40B | $4.56B | $41.63B |
| Terminal | — | TV=$243.3B | PV(TV)=$118.1B (74% of EV) | EV=$159.7B |
| Intrinsic Value | — | — | EV $159.7B − Net Debt → Equity / Shares | $494 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $243.3B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $118.1B). Enterprise Value = PV of FCFs ($41.6B) + PV of TV ($118.1B) = $159.7B. Subtracting net debt gives equity value of $154.4B, divided by shares outstanding = $494 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.5% | $405 | $451 | $512 | $597 | $725 |
| 6.0% | $355 | $389 | $433 | $492 | $573 |
| 6.5% | $316 | $342 | $374 | $416 | $472 |
| 7.0% | $283 | $304 | $329 | $360 | $400 |
| 7.5% | $256 | $273 | $292 | $316 | $346 |
| 8.0% | $233 | $247 | $262 | $281 | $304 |
| 8.5% | $214 | $225 | $238 | $253 | $271 |
| 9.0% | $197 | $206 | $217 | $229 | $243 |
| 9.5% | $182 | $190 | $199 | $209 | $221 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $-0.49 | — | — | — | Actual |
| 2023 | $5.01 | — | — | — | Actual |
| 2024 | $11.89 | — | — | — | Actual |
| 2025 | $7.40 | — | — | — | Actual |
| 2026 | $10.00 | $11.63 | $12.83 | 25 | Estimate |
| 2027 | $11.56 | $13.51 | $15.79 | 25 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $24.4B | — | — | — | Actual |
| 2023 | $24.9B | — | — | — | Actual |
| 2024 | $23.6B | — | — | — | Actual |
| 2025 | $25.5B | — | — | — | Actual |
| 2026 | $20.1B | $30.7B | $41.0B | 25 | Estimate |
| 2027 | $22.1B | $33.0B | $44.6B | 25 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Andrew Weisel | Scotiabank | Buy | $441 | +41.7% |
| Shelby Tucker | TD Cowen | Strong Buy | $381 | +22.4% |
| David Arcaro | Morgan Stanley | Buy | $360 | +15.7% |
| Nicholas Campanella | Barclays | Buy | $358 | +15.0% |
💡 Investment Thesis
- AI data center power demand catalyst: Hyperscalers (Microsoft, Amazon, Google, Meta) are racing to secure baseload clean power for AI training and inference workloads. Nuclear is the only 24/7 zero-carbon option at scale — Constellation controls the largest fleet.
- Three Mile Island restart (Crane Clean Energy Center): $1.6B investment to restart 835 MW, fully contracted under a 20-year PPA with Microsoft at premium pricing. Revenue contribution expected from 2028.
- Operating leverage inflecting: Normalized FCF of ~$3B reflects mid-cycle earnings power after TMI capex normalizes. Nuclear operating costs are largely fixed, so incremental MW sold at premium PPA rates flows directly to the bottom line.
- Regulatory tailwind: Inflation Reduction Act provides nuclear production tax credits ($15/MWh), which Constellation can monetize. States increasingly value nuclear as clean baseload for grid reliability.
- Scarcity value of nuclear capacity: No new nuclear plants are being built in the US. Existing nuclear capacity is becoming a scarce, high-value asset as data center power demand grows 15-25% annually.
👔 Management Quality & Culture
CEO: Constellation Energy · Tenure: Since 2021 (~5 yrs)
Net Insider Buys (12m)
+537,510 shares
Incentive Alignment
⚠️ Moderate
CEO Background & Track Record
Executive Profiles - Leadership | Constellation Energy
As Senior Vice President of Strategy, Corporate Affairs and Advocacy, Emily Duncan leads Constellation’s enterprise strategy and integrated external engagement including communications, marketing and philanthropy. ... Daniel L. Eggers · As
As Senior Vice President of Strategy, Corporate Affairs and Advocacy, Emily Duncan leads Constellation’s enterprise strategy and integrated external engagement including communications, marketing and philanthropy. ... Daniel L. Eggers · As
Board & Committees - Leadership | Constellation Energy
Mr. de Balmann has extensive experience in corporate finance, including the derivatives and capital markets as well as industry experience as a director of Constellation Energy Group from 2003 to 2012.
Mr. de Balmann has extensive experience in corporate finance, including the derivatives and capital markets as well as industry experience as a director of Constellation Energy Group from 2003 to 2012.
Constellation Energy Corporation (CEG) Leadership & Manageme
Constellation Energy's CEO is Joe Dominguez, appointed in Oct 2021, has a tenure of 4.42 years. total yearly compensation is $17.12M, comprised of 8.7% salary and 91.3% bonuses, including company stock and options. dir
Constellation Energy's CEO is Joe Dominguez, appointed in Oct 2021, has a tenure of 4.42 years. total yearly compensation is $17.12M, comprised of 8.7% salary and 91.3% bonuses, including company stock and options. dir
Employee Ratings
Culture Signal
Mixed
✅ Strengths
- good pay
- recommend
⚠️ Concerns
- poor management
- toxic
Employee Review Excerpts
Constellation Energy "management" Reviews | Glassdoor
Sep 16, 2025 · Armed security officer · Former employee, more than 1 year · Clinton, IL · Recommend · CEO approval · Business Outlook · Pros · - Great Pay - 12 Hour shifts and 4/3 day work weeks (They invert) - Low work - Very understanding
Sep 16, 2025 · Armed security officer · Former employee, more than 1 year · Clinton, IL · Recommend · CEO approval · Business Outlook · Pros · - Great Pay - 12 Hour shifts and 4/3 day work weeks (They invert) - Low work - Very understanding
Constellation Energy Reviews (731): Pros & Cons of Working A
"•Culture within engineering is great." "Good Salary and bonus." Users say... "Poor management" "long hours but easily manageable" "Communication to lower tiers is poor." &q
"•Culture within engineering is great." "Good Salary and bonus." Users say... "Poor management" "long hours but easily manageable" "Communication to lower tiers is poor." &q
Constellation Energy Engineer Reviews | Glassdoor
Oct 1, 2025 · Engineer · Current employee · Recommend · CEO approval · Business Outlook · Pros · Good Pay Good Manager Overall Good · Cons · Location of every workplace not very good, must know before starting. Show more · Constellation Ene
Oct 1, 2025 · Engineer · Current employee · Recommend · CEO approval · Business Outlook · Pros · Good Pay Good Manager Overall Good · Cons · Location of every workplace not very good, must know before starting. Show more · Constellation Ene
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Accumulate — Constellation Energy Corporation (CEG)
Current price: $311.28 | Analyst Avg PT: $380.60
$203
🔴 Bear
$308
📊 Base
$494
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$284 | Begin position |
| Tier 2 — Add | ≤$256 | Add on weakness |
| Tier 3 — Full | ≤$193 | Full allocation |
| Sell Alert | ≥$420 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Accumulate. Constellation Energy is the premier nuclear-for-AI play — the largest operator of carbon-free baseload power in the US at a time when hyperscalers are desperate for 24/7 clean electricity. Our DCF base case fair value of $308/share suggests meaningful upside from the current $311. The bull case at $494 reflects the full AI power demand thesis. The stock trades at a premium to traditional utilities, but the AI data center power demand thesis and nuclear capacity scarcity justifies a higher multiple. The Microsoft PPA for TMI restart validates the model, but execution risk remains. Accumulate on weakness below Tier 1 entry; the long-term thesis is compelling.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Normalized FCF Base | FY2025 reported FCF of $1,288M is depressed by ~$1.6B in TMI restart capex and working capital timing. We use a normalized $3,000M base to reflect mid-cycle earnings power after the TMI investment normalizes (expected 2027+). This is supported by EBITDA of $5.7B and maintenance capex of ~$1.5-2B, implying sustainable FCF of $3B+. |
| WACC Calibration (7.5%) | We use 7.5% WACC, below the pure CAPM estimate of 8.25%. Constellation's 20-year contracted PPA with Microsoft and regulated rate base provide bond-like revenue visibility with significantly less volatility than the market assumes. The contracted revenue profile supports a lower discount rate. |
| DCF vs Analyst PT Gap | Our base IV of $308 is below the analyst consensus PT of $380.60. This gap reflects the nuclear scarcity premium: existing nuclear capacity cannot be replicated on any reasonable timeline, and the AI data center demand thesis gives Constellation pricing power that a standard DCF does not fully capture. The bull case of $494 better reflects this premium. |
| AI Data Center Premium | The base case growth of 10% Stage 1 / 6% Stage 2 already incorporates a premium above utility-sector averages (2-4%). This reflects the structural demand shift from AI data centers needing 24/7 clean baseload power. The bull case at 15%/8% assumes multiple hyperscaler PPAs at premium pricing. |
| TMI Restart (Crane Clean Energy Center) | The $1.6B investment to restart Three Mile Island Unit 1 is expected to generate 835 MW of dedicated baseload power under a 20-year PPA with Microsoft. Revenue contribution expected from 2028, with incremental FCF of $300-500M annually once operational. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.