Constellation Energy (CEG) started trading publicly earlier this year after being spun off from Exelon. CEG announced first-quarter numbers, marking its swing in profit.
CEG reported GAAP revenue of $5.59 billion versus $5.56 in the comparable year-ago period. Notably, CEG delivered a net income of $106 million. In comparison, it had reported a net loss of $793 million in the year-ago period.
This change of fortune was attributable to favorable market and portfolio conditions, low nuclear fuel costs, and the absence of extreme cold-weather events.
Management Weighs In
The President and CEO of CEG, Joseph Dominguez, commented, “We have made strong financial and operational progress since our launch as a standalone company and are focused on our mission of accelerating the transition to a carbon-free future.”
Daniel Eggers, CFO of CEG, added, “Our commercial operations won new business and captured value as energy prices increased. Year-to-date, we took steps to further strengthen our balance sheet with the accelerated repayment of nearly $2.5 billion in debt.”
Looking ahead to fiscal 2022, CEG sees adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) landing between $2.35 billion and $2.75 billion.
Analyst’s Take
Evercore ISI analyst Vijay Kumar has reiterated a Buy rating on the stock while increasing the price target to $69 from $55.
Overall, the Street has a Strong Buy Consensus rating on CEG based on nine Buys and three Holds. The average CEG price target of $65.25 implies a potential upside of 22%. That’s after a 14.6% decline in share prices over the past month.
Investors Remain Positive
In tandem with this turnaround, TipRanks data indicates investor sentiment remains positive in the stock. Of the total portfolios holding CEG, investors allocate 2.46% of their holdings to CEG, and the number of portfolios holding CEG has increased by 1.9% over the last seven days.
Closing Note
While CEG delivered a robust performance for the first quarter, it is also delivering on a number of factors. It has successfully executed a planned debt reduction of about $2.5 billion; partnered with Microsoft to develop a carbon-free energy matching solution; and entered into agreements with Sheetz and Comcast to help them reduce carbon footprints.
Furthermore, CEG remains the largest clean and carbon-free energy producer in the U.S., providing 10% of all carbon-free energy to the country’s grid.
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