Electricity is the new oil in the 21st century - and this is likely to remain the case, as the global hunger for energy is constantly growing. This is not least due to the emergence of disruptive technologies such as artificial intelligence, whose data centers have the electricity requirements of entire cities. To meet this demand, US President Donald Trump has recently made a strong case for nuclear power. He signed several executive orders to significantly accelerate the expansion of nuclear power from the current 100 gigawatts (GW) to 400 GW by 2050. In light of these developments, one industry in particular is coming under the spotlight: energy suppliers. One of the beneficiaries is the power plant operator Constellation Energy.
The leading provider of electricity for private households and companies in the USA currently has a capacity of more than 30,000 megawatts (MW) consisting of nuclear power, wind, solar, natural gas and hydropower. This means that the Group supplies more than 20 million households with clean energy. Speaking of clean, Constellation aims to eliminate 100% of its greenhouse gas emissions by 2040. The USD 27 billion acquisition of Calpine earlier this year, an operator of gas-fired and geothermal energy plants, should also contribute to this. According to Constellation CEO Joe Dominguez, the combination of the two companies offers the broadest range of energy products and services in the industry. This merger is a significant step toward a more sustainable energy future," he said.
Shareholders should also benefit from the deal. The takeover will be reflected in an increase in adjusted operating earnings per share of more than a fifth as early as 2026. In addition, the management is planning an annual free cash flow of more than USD 2 billion from the transaction. This in turn will create strategic capital and scope for reinvestment. In addition, Constellation's base earnings forecast remains for double-digit growth until the end of the decade.
The earnings development in the first quarter of 2025 also showed a strong upward trend. Adjusted earnings per share improved by 17.5% to USD 2.14. However, the Baltimore-based company narrowly missed analysts' expectations, which had forecasted USD 2.18. Revenue also grew by double digits, reaching USD 6.79 billion, which was well above the projection of USD 5.44 billion. Renewable energy accounted for 96.2% of available energy, remaining nearly unchanged compared to the previous year. “Our power plant fleet had a good start to the year,” commented CFO Dan Eggers in the interim report, adding: “Our nuclear plants achieved a capacity factor of 94.1%, and our gas-fired plants had a feed-in rate of 99.2%.” The financial expert is also optimistic about the remainder of the year. He has set a target for adjusted operating earnings of USD 8.90 to 9.60 per share, which would represent an increase of 6.7% at the midpoint of the range. If the current analyst estimate of USD 9.51 is met, this would even represent an improvement of nearly ten percent.
Constellation is also receiving a tailwind for the coming years from the White House. The Trump administration is committed to preserving and expanding American nuclear power plants in order to strengthen the domestic economy and maintain a leading position in the global AI race. This, in turn, pleases the energy company: “Constellation is walking the walk with plans to invest billions of dollars into its fleet on projects like increasing the generation capacity of our plants by up to 1,000 additional megawatts and relicensing the entire fleet into the 2070s, creating over 11,000 family-sustaining jobs for a minimum of 20 years,” the company said in a statement regarding the administration’s executive orders to promote nuclear energy. The importance of nuclear power for “Big Tech” is demonstrated by a recently signed contract with Meta for the operation of its data centers. Constellation will supply the Facebook parent company with electricity from the Clinton nuclear power plant in the U.S. state of Illinois for 20 years. According to company head Dominguez, talks are also being held with other potential nuclear power customers.
There is currently a lot of movement in Constellation's share price - but on balance no performance. This is the interim conclusion for the development since the takeover was announced on January 10, 2025. If the average price target of 19 analyses is used for orientation, the air is also thin at the current level. This amounts to USD 320 and is therefore only around 2% away from the current level. The new soft-callable barrier reverse convertibles, on the other hand, offer significantly more potential. These convert a potential sideways movement into double-digit percentage returns. The CHF variant offers an attractive interest rate of 12.00% p.a. with a maximum term of one year, while the USD-denominated product even offers a coupon of 17.00% p.a., which is paid out quarterly.
In order to receive a pro rata coupon, the Constellation share must be quoted above the coupon trigger level on the observation dates. This threshold is only 50% of the starting price - and thus gives the underlying a lot of room on the downside. If a coupon payment is nevertheless not made on a date, it is not lost but can be made up at a later date thanks to the memory function. The prerequisite for this is that the share closes above the trigger level again on one of the following observation dates. If the barrier is breached during the term, the final fixing determines the final repayment: if the price is then below the strike level, losses may be incurred. If, on the other hand, the underlying closes at or above the strike at maturity, the full nominal amount is paid out. Important: Every three months - at the earliest after 6 months - the issuer has the right to early redemption at 100% for both BRCs.
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