Stock Analysis

The Constellation Energy Corporation (NASDAQ:CEG) Analysts Have Been Trimming Their Sales Forecasts

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NasdaqGS:CEG
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The latest analyst coverage could presage a bad day for Constellation Energy Corporation (NASDAQ:CEG), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about Constellation Energy recently, with the stock price up a noteworthy 12% to US$74.30 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

After the downgrade, the consensus from Constellation Energy's eight analysts is for revenues of US$12b in 2022, which would reflect a disturbing 43% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$15b of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Constellation Energy, given the substantial drop in revenue estimates.

View our latest analysis for Constellation Energy

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NasdaqGS:CEG Earnings and Revenue Growth August 8th 2022

The consensus price target rose 9.9% to US$75.21, with the analysts clearly more optimistic about Constellation Energy's prospects following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Constellation Energy analyst has a price target of US$97.00 per share, while the most pessimistic values it at US$54.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Constellation Energy's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 67% by the end of 2022. This indicates a significant reduction from annual growth of 0.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Constellation Energy is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Constellation Energy going forwards.

Want more information? At least one of Constellation Energy's eight analysts has provided estimates out to 2024, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether Constellation Energy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:CEG

Constellation Energy

Constellation Energy Corporation generates and sells electricity in the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth3
Past Performance0
Financial Health3
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Good value with moderate growth potential.