Constellation Energy Corporation (NASDAQ: CEG) closed Friday at $262.75, down 4.2% for the week, while the S&P 500 gained about 1.0%. The stock's weekly decline comes as investors weigh the company's upcoming second-quarter earnings report and the latest results from the PJM capacity auction.
According to preliminary estimates, Constellation's gross PJM capacity value for the 2028/29 planning year is approximately $2.24 billion, a 2.5% increase compared with the previous auction. This growth occurred even though the auction clearing price fell 2.5% to $325 per MW-day from $333.44. The increase was driven by a significant rise in cleared volume, particularly in the fossil and other capacity segment, which climbed 31% to 3,175 MW from 2,425 MW. That segment's preliminary annual value jumped 27.6% to $377 million.
Nuclear capacity, however, saw a slight decline. Cleared nuclear volume rose 1.1% to 15,700 MW, but the preliminary gross value slipped 1.4% to $1.86 billion. Constellation noted that nuclear capacity payments may reduce federal production-tax-credit benefits, so these receipts should not be added to base earnings.
The company is scheduled to report second-quarter results on Thursday, August 6, with an earnings call at 10:00 a.m. EDT. Early estimates suggest adjusted earnings per share in the range of $2.24 to $2.35, compared with $1.91 in the same period last year, implying an increase of 17% to 23%. Revenue is projected at $7.47 billion, up about 22% from $6.10 billion.
For the full year, Constellation maintains its adjusted EPS guidance of $11 to $12, while the consensus stands at $11.74. In the first quarter, the company reported adjusted EPS of $2.74. CEO Joe Dominguez emphasized that "our focus is on execution," as the company integrates Calpine and manages its diverse generation fleet.
Market participants will be watching several key factors in the earnings report: the progress of Calpine integration, nuclear generation levels, and the operational availability of the gas fleet. The nuclear capacity factor for the first quarter was 92.3%, down from 94.1% a year earlier. The forced-outage factor for gas, oil, and pumped-storage units stood at 4.5%.
PJM's latest capacity auction cleared 6,831 MW under its reliability target, reflecting continued demand growth. PJM President and CEO David Mills noted that electricity demand "continues to grow faster than electricity supply," with forecasted peak demand rising by about 2,000 MW since the last auction.
The auction results provide a buffer of capacity ahead of the earnings release. However, risks remain, including PJM price caps, offsets from federal tax credits, plant outages, and volatility in power prices. Thursday's report will indicate whether the increased capacity value is translating into stable cash flow.
Among merchant-power peers, Constellation and Vistra (NYSE: VST) declined on Friday, while NRG Energy (NYSE: NRG) and Talen Energy (NASDAQ: TLN) posted modest gains. The mixed performance reflects the sector's sensitivity to power prices and demand dynamics.
