Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St’s investing ideas for FREE.
-
If you are wondering whether Constellation Energy stock is still priced attractively after its big run over recent years, this article walks through what the current share price might be implying about value.
-
The stock last closed at US$287.35, with a 7 day return of 15.8% decline, a 30 day return of 20.5% decline, a year to date return of 21.5% decline, and a 1 year return of 16.5% decline, set against a 3 year return of about 2.4x.
-
Recent price moves sit alongside an ongoing investor focus on US utilities and energy transition themes, where companies like Constellation Energy are often viewed through the lens of long term contracted cash flows and policy support. Broader sector news around power demand, grid investment and clean energy policy tends to feed into expectations for companies in this space, which can help explain why the stock has been reassessed after a strong multi year performance.
-
Simply Wall St currently gives Constellation Energy a valuation score of 2 out of 6, and next we will walk through what different valuation methods say about that score, before finishing with a practical way to think about valuation that can help tie all of these approaches together.
Constellation Energy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today using a required rate of return. It is essentially asking what those future dollars are worth in present terms.
For Constellation Energy, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model based on cash flow projections. The latest twelve month free cash flow is a loss of about $657.2m, so the starting point is negative. From there, analyst estimates and extrapolations point to projected free cash flow of $5.5b in 2030, with interim years such as 2026 and 2027 sitting around $4.0b each. Amounts beyond the first few analyst covered years are extrapolated by Simply Wall St rather than taken directly from analyst reports.
Pulling these projections together, the model arrives at an estimated intrinsic value of about $296.68 per share. Against the recent share price of US$287.35, that implies the stock is around 3.1% undervalued, which is a relatively small gap.
Result: ABOUT RIGHT
Constellation Energy is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
