Where Will Constellation Energy Be in 5 Years?

Key Points

• Constellation Energy has lots of visibility into its earnings growth over the next few years.

• It has enhanced that visibility by signing nuclear power deals with Meta Platforms and Microsoft.

• It's also in the process of buying fellow power company Calpine to boost its earnings growth.

• 10 stocks we like better than Constellation Energy ›

Constellation Energy (NASDAQ: CEG) is the country's largest carbon-free energy producer. Its fleet of nuclear, hydro, wind, and solar energy assets has the capacity to generate 32.4 gigawatts (GW) of power annually, sufficient to meet the needs of over 20 million homes and businesses.

That fleet, especially its industry-leading nuclear energy plants, is becoming increasingly important given the country's surging power needs. Rising electricity demand from AI data centers, new factories, and electric vehicle (EV) charging should support robust earnings growth for Constellation over the next five years. Here's a look at where the company expects to be by 2030.

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Image source: Getty Images.

Cashing in on growing demand for clean power

Constellation Energy is the nation's leading nuclear power producer by a wide margin. It currently has 22.1 GW of competitive generation capacity, three times more than its closest peer (Vistra at 6.3 GW).

It also produces more carbon-free energy than leading utility NextEra Energy (178.2 GW to 110.5 GW). The company primarily sells the power it produces to commercial and industrial customers, for an industry-leading 21% market share.

The power company's business model generates fairly stable and visible revenue from regulated rate structures and long-term power purchase agreements (PPAs). It has been signing more PPAs with large technology companies to support their growing power needs.

For example, last September, the utility signed a 20-year PPA with Microsoft to support the launch of the Crane Clean Energy Center. Microsoft is buying 100% of the power from the former Three Mile Island Unit 1 (over 800 megawatts) to help support its data center options.

Constellation had shut down the nuclear reactor several years ago for economic reasons. It will now restart that unit, which should be back on line by 2028.

Meta Platforms also signed a 20-year PPA with the company. It will purchase all the power generated from the 1.1 GW Clinton Clean Energy Center, starting in 2027. Constellation nearly had to shut down the center several years ago due to poor economics.

However, the Future Energy Jobs Act prevented its premature retirement by providing financial support through mid-2027. Meta will begin purchasing power from that plant after the support program ends to help meet its power needs.

These deals and similar revenue frameworks give Constellation Energy strong visibility into its earnings growth potential over the next several years. The company expects its adjusted earnings per share (EPS) to grow at more than a 10% compound annual rate through 2028.

A growth accelerator is coming

Its current growth forecast doesn't include any impact from its pending acquisition of Calpine. The company agreed to buy the power producer in a $26.6 billion deal in January. It's hoping to close the transaction within a year of signing the merger agreement.

The merger will create the country's largest clean power producer. It will combine Constellation's nuclear- and renewables-focused portfolio with Calpine's leading natural gas and geothermal plants. The combined company will have over 60 GW of capacity for zero- and low-carbon power production.

The company expects the deal to boost its EPS by more than 20% next year. And it sees the merger adding at least $2 per share to its future earnings and $2 billion to its annual free cash flow. That will help support double-digit EPS growth through the decade.

A much bigger and more profitable company

Constellation Energy expects to become a significantly larger company once it closes its acquisition of Calpine. It also expects to continue capitalizing on surging power demand, which should provide a meaningful earnings boost over the next few years. By 2030, it expects to be a much larger and more profitable company, which should enable it to create substantial value for shareholders in the years to come.

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Matt DiLallo has positions in Meta Platforms and NextEra Energy. The Motley Fool has positions in and recommends Constellation Energy, Meta Platforms, Microsoft, and NextEra Energy. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.