Constellation Energy (CEG) Margin Reset From 15.9% To 9.1% Tests Bullish Narratives

Constellation Energy (CEG) has wrapped up FY 2025 with Q4 revenue of US$6.1b, Basic EPS of US$1.38 and net income of US$432m, putting a concrete set of numbers behind the recent share price of US$312.64. The company has seen quarterly revenue range between US$6.1b and US$6.8b across FY 2025, while Basic EPS moved from US$0.38 in Q1 to US$2.97 in Q3 before landing at US$1.38 in Q4, giving investors a clear view of how profit per share has shifted through the year. With trailing 12 month net profit margin sitting below the prior year's level, the latest print leaves you weighing solid profitability against a thinner margin profile.

See our full analysis for Constellation Energy.

With the headline numbers on the table, the next step is to line them up against the main narratives around Constellation Energy to see which stories the results support and which ones start to look a bit stretched.

See what the community is saying about Constellation Energy

Margins Step Down From 15.9% To 9.1%

• Over the last 12 months, net profit margin is 9.1% compared with 15.9% the year before, alongside trailing 12 month net income of about US$2.3b on US$25.5b of revenue.
• Bears point to margin pressure as a key weak spot, and the current 9.1% margin lines up with their concern that rising nuclear operating and compliance costs can eat into profitability, even though five year earnings growth of 54.4% a year shows the business has grown earnings strongly over a longer stretch.
  • Critics highlight that, despite those strong five year earnings trends, the most recent one year comparison in the analysis shows negative earnings growth, which backs the idea that keeping margins high is getting harder.
  • That mix of strong long term earnings growth and a lower latest margin is exactly what the cautious narrative focuses on, as it suggests higher capital and running costs could weigh more heavily as the nuclear fleet ages.

The skeptics' case leans heavily on this margin reset, so it is worth checking how their arguments stack up against the full bear case for Constellation Energy: 🐻 Constellation Energy Bear Case

Rich 48.9x P/E Against Slower 7.1% Revenue Growth

• CEG trades on a trailing P/E of 48.9x compared with peer and US Electric Utilities averages of about 23x, while revenue is forecast to grow around 7.1% a year versus a 10.4% US market forecast. The current share price of US$312.64 sits roughly 5.7% below the DCF fair value of about US$331.42.
• Consensus narrative sees long term, higher margin carbon free contracts and federal nuclear support as reasons this high multiple might still be justifiable, but the combination of a premium P/E and revenue forecasts below the wider market makes the valuation debate quite sharp.
  • Supporters of the consensus view point to forecast earnings growth of about 14.8% a year and strong five year earnings expansion of 54.4% a year as the key offset to slower revenue growth.
  • On the other hand, the gap between the 48.9x P/E and industry levels near 22.6x means a lot of that earnings growth story is already reflected in the multiple, even before you factor in the margin compression from 15.9% to 9.1%.

EPS Swings And Big Spread To US$394.21 Target

• Basic EPS for FY 2025 moved from US$0.38 in Q1 to US$2.97 in Q3 and US$1.38 in Q4, giving trailing 12 month EPS of about US$7.41, while analysts in the narratives reference a price target of roughly US$394.21 compared with today’s US$312.64 share price.
• Bullish investors argue that accelerating demand for carbon free power, long dated premium contracts and potential margin expansion well beyond current forecasts can justify that higher price target. Yet the recent EPS path and lower trailing margin keep that view very dependent on how the next few years of earnings actually play out.
  • Supporters of the bullish story highlight forecast earnings growth of about 14.8% a year and past five year earnings growth of 54.4% a year as evidence that EPS could move closer to those more optimistic long term projections.
  • At the same time, the current margin of 9.1% versus 15.9% a year earlier, plus the mention of shareholder dilution over the past year, shows the starting point is not as clean as a simple straight line from today’s US$7.41 of trailing 12 month EPS to the higher earnings levels in the bullish case.

If you want to see how bullish investors build a case from these EPS swings and long term growth assumptions, the full optimistic narrative for Constellation Energy lays it out in detail: 🐂 Constellation Energy Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Constellation Energy on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If the mix of optimism and concern in this story feels familiar, now is the time to look at the numbers yourself and decide where you stand. Start with 3 key rewards and 2 important warning signs.

Explore Alternatives

Constellation Energy’s rich 48.9x P/E, thinner 9.1% net margin and recent shareholder dilution leave plenty of questions around how much risk is already priced in.

If that mix of premium pricing and pressure on profitability makes you uneasy, take a few minutes to compare it with 78 resilient stocks with low risk scores that aim to keep valuation and balance sheet risk on a tighter leash.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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