Long-established in the Utilities - Independent Power Producers industry, Constellation Energy Corp (CEG, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.26%, juxtaposed with a three-month change of -8.75%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Constellation Energy Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 5/10
- Growth rank: 2/10
- GF Value rank: 1/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned Constellation Energy Corp the GF Score of 58 out of 100, which signals poor future outperformance potential.
Understanding Constellation Energy Corp Business
Constellation Energy Corp offers energy solutions. It provides clean energy and sustainable solutions to homes, businesses, the public sector, community aggregations, and a range of wholesale customers (such as municipalities, cooperatives, and other strategics). The company offers comprehensive energy solutions and a variety of pricing options for electric, natural gas, and renewable energy products for companies of any size. With a market cap of $79.144 billion and sales amounting to $23.982 billion, Constellation Energy Corp operates with an operating margin of 16.03%.
Financial Strength Breakdown
Constellation Energy Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 2.14, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81. Additionally, the company's low cash-to-debt ratio at 0.21 indicates a struggle in handling existing debt levels.
Profitability Breakdown
Constellation Energy Corp's low Profitability rank can also raise warning signals. Additionally, Constellation Energy Corp's Gross Margin has also declined over the past five years, as evidenced by the data: 2020: 16.19; 2021: 14.92; 2022: 8.74; 2023: 12.97; 2024: 15.37. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Constellation Energy Corp seems to falter, as evidenced by the company's low Growth rank. Over the past five years, Constellation Energy Corp has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -0.2, while the five-year growth rate is at -8.7. These figures underscore potential challenges in the company's profitability.
Next Steps
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights Constellation Energy Corp's potential for underperformance. Investors should carefully consider these factors when evaluating the company's future prospects. For those seeking companies with stronger GF Scores, GuruFocus Premium members can explore more options using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
