CEG Surges 6.4% In A Single Day, Now Is Not The Time To Buy The Stock
We believe there are only a couple of things to fear in CEG stock given its overall Moderate operating performance and financial condition. But keeping in mind its High valuation, we think that the stock is Unattractive. Here is our multi-factor assessment.
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | High |
| What you get: | |
| Growth | Moderate |
| Profitability | Weak |
| Financial Stability | Strong |
| Downturn Resilience | Strong |
| Operating Performance | Moderate |
| Stock Opinion | Unattractive |
But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure
Let’s get into details of each of the assessed factors but before that, for quick background: With $100 Bil in market cap, Constellation Energy provides electricity generation and sales across the U.S. with 32,400 MW capacity from nuclear, wind, solar, natural gas, and hydroelectric assets across five regional segments.
[1] Valuation Looks High
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| CEG | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 4.1 | 3.3 |
| Price-to-Earnings Ratio | 33.7 | 24.2 |
| Price-to-Free Cash Flow Ratio | -42.2 | 21.4 |
This table highlights how CEG is valued vs broader market. For more details see: CEG Valuation Ratios
[2] Growth Is Moderate
- Constellation Energy has seen its top line grow at an average rate of 6.8% over the last 3 years
- Its revenues have grown 5.4% from $24 Bil to $25 Bil in the last 12 months
- Also, its quarterly revenues grew 11.4% to $6.1 Bil in the most recent quarter from $5.5 Bil a year ago.
| CEG | S&P 500 | |
|---|---|---|
| 3-Year Average | 6.8% | 5.3% |
| Latest Twelve Months* | 5.4% | 5.1% |
| Most Recent Quarter (YoY)* | 11.4% | 6.1% |
This table highlights how CEG is growing vs broader market. For more details see: CEG Revenue Comparison
[3] Profitability Appears Weak
- CEG last 12 month operating income was $3.4 Bil representing operating margin of 13.9%
- With cash flow margin of 1.8%, it generated nearly $456 Mil in operating cash flow over this period
- For the same period, CEG generated nearly $3.0 Bil in net income, suggesting net margin of about 12.1%
| CEG | S&P 500 | |
|---|---|---|
| Current Operating Margin | 13.9% | 18.7% |
| Current OCF Margin | 1.8% | 20.3% |
| Current Net Income Margin | 12.1% | 12.6% |
This table highlights how CEG profitability vs broader market. For more details see: CEG Operating Income Comparison
[4] Financial Stability Looks Strong
- CEG Debt was $8.3 Bil at the end of the most recent quarter, while its current Market Cap is $100 Bil. This implies Debt-to-Equity Ratio of 8.2%
- CEG Cash (including cash equivalents) makes up $2.0 Bil of $53 Bil in total Assets. This yields a Cash-to-Assets Ratio of 3.7%
| CEG | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 8.2% | 20.7% |
| Current Cash-to-Assets Ratio | 3.7% | 7.1% |
[4] Downturn Resilience Is Strong
CEG has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- CEG stock fell 24.5% from a high of $97.16 on 25 November 2022 to $73.40 on 23 March 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 25 July 2023
- Since then, the stock increased to a high of $354.89 on 4 August 2025 , and currently trades at $320.00
| CEG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -24.5% | -25.4% |
| Time to Full Recovery | 124 days | 464 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CEG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.