This Magnificent Energy Stock Is Down 20%. Buy It Before It Sets a New All-Time High.

After a strong run in 2025, shares of Constellation Energy (NASDAQ: CEG) appear, at first glance, to be running low on fuel in 2026, as they are down more than 20% since the start of the year.

The company owns the largest nuclear power fleet in the U.S., putting it in a prime position to benefit from growing power needs from data centers. It has 55 gigawatts of power capacity from its nuclear, natural gas, geothermal, hydroelectric, wind, and solar facilities, enough energy to power 27 million homes.

There are two explanations for Constellation's share-price decline this year. The first is somewhat minor: underwhelming guidance for 2026. The company said it expects 2026 adjusted earnings per share (EPS) of between $11 and $12, with the midpoint up 55% over 2025, narrowly below analysts' $11.60 a share forecast.

The stock was also pulled down by news that the company's restart of Three Mile Island (now called the Crane Clean Energy Center) will take longer than expected because of power line delays.

But there are reasons for investor optimism as well. Here's why.

Image source: Getty Images.

Taking a longer look at the stock

Through 2029, however, the energy company is predicting a compound annual growth rate (CAGR) for EPS of 20% or higher. The company has a substantial moat because nuclear power plants are difficult to build from both a regulatory standpoint and a cost basis.

In 2025, Constellation reported revenue of $25.5 billion, up 8%, though EPS was $7.39, down 37.8% year over year, thanks mainly to one-time costs related to the company's $16.4 billion acquisition of natural gas and geothermal energy provider Calpine.

Data centers, crypto mining, and artificial intelligence are all driving power demand in the U.S., and Constellation, thanks to its 5,650 megawatts (MWhs) of long-term clean energy agreements, has a predictable revenue driver. Constellation already has a 20-year deal that will allow Microsoft to purchase power from the Crane Clean Energy Center once it restarts.

Even with that agreement, the company has 147 million MWhs of annual nuclear generation it can sell to hyperscalers for long-term deals, giving Constellation pricing power.

Get paid while you wait for the rebound

Constellation Energy has increased its dividend by 202% over the past decade, including a 10% bump this year to $0.4265 per quarterly share. The yield is only around 0.57% at its current share price, but the company has said it plans to raise the dividend by 10% or more every year, and since its payout ratio is only 21%, that's certainly not a problem.

I also think investors are not fully accounting for the benefits of Calpine's acquisition. In February, Constellation announced that Calpine had landed a 380-megawatt agreement with Dallas-based CyrusOne, a data center developer, to connect and serve a new data center south of Dallas. That deal is in addition to a 400-megawatt contract signed late last year with CyrusOne for a data center near the Thad Hill Energy Center, northwest of Waco, Texas.

James Halley has positions in Microsoft. The Motley Fool has positions in and recommends Constellation Energy and Microsoft. The Motley Fool has a disclosure policy.