Key Takeaways
- Constellation Energy shares rose 14% after Google signed a 3,590 MW power deal that includes 890 MW of new nuclear capacity on a 20-year contract.
- It’s Constellation’s second 20-year contract with a tech giant in less than a week, and that makes a strong case for a higher valuation after the stock’s slide.
- Constellation will invest more than $4.3 billion in upgrades at 11 reactors, and the first new capacity is due by 2028.
- Analysts expect normalized EPS to rise about 76% from 2025 to 2028, and long contracts make that path more dependable.
Constellation Energy (CEG) shares jumped 14% on Tuesday after Google signed up for 3,590 megawatts (MW) of its power on the PJM grid.
It’s the second tech giant in less than a week to sign Constellation up for decades.
What exactly happened
Before Tuesday’s open, Google parent Alphabet (GOOG) and Constellation announced:
- A 20-year power purchase agreement for 890 MW of new capacity, from uprates at 11 Constellation reactors in Illinois, Pennsylvania and New Jersey
- A 15-year supply agreement for another 2,700 MW from its existing plants
- More than $4.3 billion of investment by Constellation, with the first uprate due by 2028
An uprate means new turbines, steam generators and controls at a plant that’s already running, so it adds power without building a new reactor. (Constellation says 890 MW equals the output of a large new one.)
Joe Dominguez, Constellation’s chairman, president and CEO, said the deal “can serve as a model for how technology companies and the energy industry can work together.”
And I’m sure shareholders are hoping so.
Two giants, 20 years each
On Sept. 30, Amazon (AMZN) signed its own 20-year deal for 690 MW from Constellation’s Calvert Cliffs plant in Maryland. That includes about 190 MW of new capacity due by 2032, backed by more than $3 billion of investment.
Add the two deals together and you get about 1,080 MW of new nuclear capacity and more than $7.3 billion of investment, with both buyers signed on for two decades.
Analysts are already pricing in substantial growth from here:
More specifically, Wall Street expects normalized EPS to climb from $9.39 in 2025 to $16.52 in 2028, up about 76%. The new megawatts arrive from 2028 on, so what changes today is how dependable those estimates look.
And as you can see, investors haven’t been terribly bullish on the opportunity, with multiples compressing over the past year:
Even after today, shares haven’t made back that slide, while the earnings behind them have kept growing. With two tech giants paying for new capacity under 20-year contracts, I think the stock deserves a higher multiple.
Dominguez called this deal a model, and Amazon signed something similar six days earlier. Who’s next?
Of course, Constellation still has to deliver those uprates on time and on budget, and neither company disclosed what Google is paying. The first test comes by 2028, when the first Google uprate is due.
So what is Constellation Energy stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Constellation Energy could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
