Constellation Energy (CEG) is back in focus after announcing a long-term nuclear power purchase agreement with Walmart, covering about 176 MW of emissions-free output from the Dresden Clean Energy Center in Illinois through two 15-year terms.

At a share price of $275.53, Constellation Energy’s recent Walmart nuclear agreement lands after a sharp year to date share price decline of 24.77%, even as short term momentum has improved with a 7 day share price return of 5.02% and a 3 year total shareholder return of 210.27% that still reflects strong longer term gains.

If this nuclear deal has you thinking about other power related opportunities, it could be a good moment to scan 89 nuclear energy infrastructure stocks

With Constellation Energy trading at US$275.53, currently sitting below analyst targets and some estimates of intrinsic value, the question for investors is whether recent weakness signals an undervalued clean power leader or a stock already pricing in future growth.

Most Popular Narrative: 25.6% Undervalued

Constellation Energy’s most followed narrative points to a fair value of $370.58 against the last close of $275.53, putting the latest Walmart deal into a wider long term context.

Growing demand for carbon-free, reliable power from large-scale customers such as data centers (Meta, Microsoft) and corporates (Comcast), driven by digitalization, electrification, and decarbonization goals, is creating new, longer-term, higher-margin contracts with price premiums, likely resulting in significant revenue and earnings growth as more transactions close.

Want to understand why this narrative supports a higher fair value for Constellation Energy? It leans on faster top line expansion, rising margins, and a richer earnings profile built around long duration contracts and premium pricing.

Result: Fair Value of $370.58 (UNDERVALUED)

However, Constellation Energy’s heavy dependence on regulated nuclear assets, as well as its concentration in long term data center contracts, could pressure profitability and reduce flexibility if conditions shift.

Another View On Constellation Energy’s Valuation

The first narrative presents Constellation Energy as about 25.6% undervalued, but the market is not particularly cheap on simple earnings terms. The stock trades on a P/E of 26x, above both US Electric Utilities at 21.6x and its peer group at 21.1x. This raises a different question.

Simply Wall St’s fair ratio for Constellation Energy is higher at 32.8x. This suggests the market could still move toward a richer earnings multiple if the growth story holds, but it also leaves room for disappointment if expectations cool. Is this a valuation gap you see as upside potential or as room for compression?

Next Steps

Mixed messages on Constellation Energy’s valuation and outlook are clear, so act while the data is fresh and weigh both sides by checking the 4 key rewards and 2 important warning signs.

Looking for more ideas beyond Constellation Energy?

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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.