Nuclear power stocks are experiencing significant gains today, driven by Constellation Energy's (CEG, Financial) announcement to restart Unit 1 at the Three Mile Island nuclear power plant. This move aims to supply electricity to power Microsoft (MSFT) data centers.
Constellation Energy (CEG, Financial) stock has surged by 16% following the news. Other nuclear power companies are also seeing substantial gains: NuScale Power Corporation (SMR) is up by 13%, Nano Nuclear Energy (NNE) by 15%, and Oklo (OKLO) with a 16% rise.
Constellation Energy (CEG, Financial) has recently signed its largest-ever power purchase agreement with Microsoft (MSFT). To fulfill this new demand, Constellation will restart Unit 1 at Three Mile Island, which is expected to generate 835 megawatts of carbon-free energy. This reactor has the capacity to operate for decades.
Restarting Unit 1 will require significant investments to restore various plant components, such as the turbine, generator, main power transformer, and cooling and control systems. Additionally, the project will need a comprehensive safety and environmental review, state and local permits, and approval from the U.S. Nuclear Regulatory Commission (USNRC). Constellation aims to complete these requirements by 2028.
Constellation Energy's decision highlights a growing interest in nuclear energy. This may also indicate increased investment in new nuclear power plant designs developed by companies like NuScale, Nano Nuclear, and Oklo.
However, investors should note that Constellation Energy (CEG, Financial) is not particularly cheap. Currently, the stock is trading at $241.85, reflecting a price-to-earnings (P/E) ratio of 32.2. The company has not generated positive free cash flow since 2019 and offers a modest dividend yield of just 0.7%.
According to GuruFocus, Constellation Energy (CEG, Financial) has a GF Value of $96.15, indicating that it is significantly overvalued. For a detailed analysis, visit the GF Value page for Constellation Energy.
Despite these valuation concerns, Constellation Energy (CEG, Financial) continues to show strong revenue growth and has a substantial market capitalization of $75.62 billion. Investors should keep a close eye on the company's future developments and financial health before making investment decisions.
