TenQ

The Constellation Energy story

Constellation Energy is the largest U.S. nuclear power producer, with its next chapter defined by whether Calpine integration and long-term nuclear contracts can turn a larger generating fleet into stronger cash flow.

Constellation Energy stock reportTenQ Score 19/36 · every chart and check from its filings
  • $271.37share price, last close
  • $96.1Bmarket value
  • 19/36TenQ Score checks passed
  • 14.4%growth a year the price assumes

The story in brief

  • Earnings measures diverge. In the quarter to June 2026, adjusted operating earnings rose to $2.55 per share from $1.91 per share, while GAAP net income fell to $1.42 per share from $2.67 per share.
  • Contracts support nuclear expansion. An additional 920 megawatts of long-term nuclear power agreements include a 176 MW Walmart agreement enabling a 30 MW expansion at Dresden.
  • Cash remains the constraint. Over the last twelve months, Constellation generated $309 million in free cash flow on $31.3 billion in revenue, leaving a free cash flow yield of 0.3%.

What drives the business

  • The January 2026 acquisition of Calpine combined Constellation's nuclear fleet with natural gas and geothermal generation, expanding the business beyond its nuclear foundation and contributing to higher adjusted operating earnings in the quarter to June 2026.
  • The combined fleet has 55 gigawatts of capacity across nuclear, natural gas, oil, geothermal, hydro, wind and solar, alongside a competitive retail business serving approximately 2.5 million customer accounts, including 80% of the Fortune 100.
  • Customer procurement contracts absorb a significant portion of the power portfolio, while wholesale markets provide an outlet for remaining generation and a source of electricity when customer requirements exceed available output.
  • The additional nuclear power agreements announced in August 2026 begin in 2029 through 2032, with Walmart's Dresden agreement linking contracted demand to investment in additional generating capacity.
  • The Crane Clean Energy Center restart is backed by a $1 billion Department of Energy loan, and approvals involving interconnection rights and its fuel license have advanced the planned restart in 2027.

What the price assumes

At $300.40 per share, the reverse DCF implies operating earnings growth of 16.0% a year for ten years at a 10.3% discount rate, using operating earnings as a substitute for free cash flow.

That compares with delivered operating earnings growth of 84.0% a year over the last 3 fiscal years and the TenQ check's 44.0% bar, which slows that record halfway toward 4%.

The implied growth rate clears that check, but it is an earnings-based assumption rather than a direct cash flow assumption, a distinction that matters alongside $309 million in free cash flow over the last twelve months.

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What could change the story

  • Nuclear outages partly offset Calpine's contribution in the quarter to June 2026, with capacity factor excluding Salem and South Texas Project declining to 93.0% from 94.8% in the quarter to June 2025.
  • Changes to PJM market rules, electricity pricing restrictions and nuclear production tax credits could alter the economics of existing plants, while excess electricity supply can produce negative wholesale prices.
  • Cash and short-term investments of $697 million leave liquidity dependent in part on access to financing, and the TenQ near-term liquidity check falls short at 1.46 against 1.50.
  • Cash returned to shareholders amounted to 816.2% of free cash flow in the TenQ check, showing that distributions and repurchases were not covered by that cash measure.
  • Return on capital employed of 5.4% falls below the TenQ check's 10.0% bar, making the returns earned on the expanded asset base an important test of the Calpine integration.

What to watch next

  • The next earnings releases will test progress toward Constellation's raised adjusted operating earnings guidance of $11.50 to $12.50 per share for 2026, alongside whether earnings gains translate into greater free cash flow.
  • Nuclear capacity factor and the expanded fleet's Equivalent Forced Outage Factor, which measures unavailability from forced outages and deratings and stood at 6.2% in the quarter to June 2026, will show how reliably the assets are operating.
  • Constellation expects the $860 million divestiture of the 606 MW Brazos Valley Energy Center to LS Power to close by the end of 2026, subject to Department of Justice approval and other closing conditions, completing the required Calpine asset disposals.
  • Further Crane updates will show whether the planned restart in 2027 remains on schedule and whether the transfer of interconnection rights expedites delivery of power to the grid as management expects.

Sources

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