Constellation Energy Group Inc.CEG

Morningstar Rating

Stock Research and Analysis

by Travis Miller

After barely surviving its ill-timed bet on higher energy prices in the fall of 2008, Constellation Energy's management has pledged to remake the business and lower its risk. We think the company's Mid-Atlantic power plants are among the best-positioned Read more

Bulls Say

Constellation's low-cost nuclear and coal-fired generating fleet and top-tier operations create sustained cost advantages.

By filling the void left by companies that exited the merchant energy business, Constellation has become a leader in competitive power markets.

Despite the economic downturn, electricity demand should continue to outpace supply additions in Constellation's region for several more years, boosting power prices. Read more

Bears Say

Energy trading firms can be risky businesses with more-volatile earnings streams, and therefore they generally trade at a lower multiple than regulated utilities.

In response to volatile markets and rising energy prices, some states that had been planning to deregulate their power markets are now reconsidering, eliminating an area of growth.

A lower dividend yield and riskier operating profile make Constellation less appealing to the risk-averse and income-seeking investors who normally buy utilities stocks.

Talk of reregulating Maryland's power markets, home to 60% of Constellation's generating fleet, could severely compromise shareholder value. Read more

Strategy

Following its near collapse, Constellation is trying to refocus on traditional power plant operations and its regulated utility, BGE. Another key element of its long-term strategy is pursuing new nuclear Read more

Management

Mayo Shattuck became CEO in November 2001 and chairman in July 2002. Shattuck had little experience in the utilities industry before taking the helm at Constellation, but his financial background is an appropriate match for a company whose success is Read more

Profile

Constellation Energy's operations include merchant energy and BGE, a regulated electric and gas public utility in central Maryland. Merchant energy includes electricity Read more

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