TLDR
- Constellation Energy cleared final DOJ approval for $26.6 billion Calpine deal, expected to close early 2026
- Stock delivered 40% gains over the past year versus S&P 500’s 13% return
- Third quarter adjusted earnings reached $3.04 per share, beating prior year’s $2.74
- Wall Street predicts over 20% earnings growth in 2026 as tech giants chase clean power
- Valuation runs at twice the utility sector average but fundamentals exceed peer benchmarks
The last regulatory roadblock just fell. Constellation Energy won final approval from the U.S. Department of Justice for its Calpine acquisition worth $26.6 billion.
Constellation Energy Corporation, CEG
The deal should wrap up in early 2026. It transforms America’s largest nuclear operator into an even more diversified energy giant.
Shares dipped after the announcement as traders digested the fine print. The DOJ required certain asset sales and concessions to approve the merger. That led some analysts to trim their expectations for deal synergies.
Still, the stock’s long-term performance speaks volumes. Shares jumped more than 40% over the past year while the broader market gained only 13%.
The Strategic Logic
Calpine operates the country’s biggest natural gas and geothermal power fleet. That complements Constellation’s nuclear-heavy portfolio perfectly.
The merger creates coast-to-coast coverage. Constellation picks up meaningful exposure in Texas, Virginia, and California—three markets seeing explosive power demand growth.
Natural gas generation is back in favor. Tech companies building AI infrastructure need dependable electricity around the clock. Constellation’s beefed-up gas capacity helps it serve this booming customer segment.
The company already produces power for over 20 million homes and businesses. Carbon-free sources account for 90% of output across its nuclear, hydro, wind, and solar facilities.
Constellation operates outside the traditional utility model. It generates electricity and sells it through competitive contracts rather than regulated distribution systems. The company commands 21% of the commercial and industrial power market.
Growth Trajectory Accelerating
Third quarter numbers confirm the momentum. Adjusted operating earnings came in at $3.04 per share compared to $2.74 in the year-ago period.
Analysts see earnings climbing at a high single-digit pace in 2025. Growth accelerates to over 20% in 2026 according to consensus forecasts.
The company plans $3 billion in capital expenditures this year and $3.5 billion next year. Nuclear fuel and clean energy projects absorb most of the investment.
Big-name customers keep joining the roster. Microsoft and Meta Platforms both signed long-term power purchase agreements. Federal clean energy contracts added to the backlog.
Constellation is bringing its Crane Clean Energy Center back online. The Department of Energy backed the 835-megawatt project with a $1 billion loan. Separately, Maryland proposals could deliver up to 5,800 megawatts of new capacity.
A partnership with Xpansiv launched emission-free energy certificates. The program monetizes Constellation’s carbon-free generation through a new channel.
Wall Street’s Take
Most analysts maintain positive ratings. A survey of 19 firms shows “Moderate Buy” consensus with an average price target around $360.
Several shops including Scotiabank, Jefferies, and Melius project prices above $400. That implies double-digit upside from current levels.
The valuation debate continues. Constellation’s price-to-earnings ratio sits at roughly double the utility sector average.
Supporters note the company’s superior metrics. Debt-to-capital runs in the low 30% range while return on equity tops 20%. Both figures outpace industry norms.
Near-term catalysts include Calpine integration updates and additional data center power contracts. Any policy shifts affecting nuclear subsidies could move the needle either direction.
The stock ended at $359.82 on December 5, down $8.80 or 2.39% for the day.
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