Constellation Energy Corporation (CEG) Earnings & Analysis

Latest quarter

Constellation reported Q2 FY2026 revenue of $7.5 billion, up 23.0% from Q2 FY2025, and said revenue exceeded the consensus by 0.48%. The company reported adjusted operating EPS of $2.55, compared with the $2.36 consensus estimate, while GAAP diluted EPS was $1.42 versus $2.67 a year earlier.

The filing attributed the revenue increase in part to operating revenue from the Calpine segment, which Constellation acquired in January 2026. It also cited higher contracted energy prices in its Mid-Atlantic and Midwest retail businesses, higher Midwest capacity prices, and higher Mid-Atlantic capacity revenue, while lower load volumes affected revenue in other power regions.

Constellation reported a gross margin of 46.4%, compared with 48.7% a year earlier, and an operating margin of 7.73%, compared with 15.6%. The filing said labor, contracting and materials costs, Calpine merger and integration costs, refueling outage costs, depreciation, and interest expense increased from the prior-year quarter. Constellation reported free cash flow of −$118.0 million, compared with $710.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Joe Dominguez said Constellation’s employees maintained a nuclear capacity factor above 99% during a Mid-Atlantic heat wave ahead of the July 4 holiday. Shane Smith said the nuclear fleet delivered a 93% capacity factor and generated 40 terawatt hours during the quarter, while longer planned refueling outages affected results.

Smith attributed the year-over-year increase in adjusted operating earnings to Calpine accretion, higher PJM capacity prices, higher realized customer margins, and portfolio optimization during volatility. He said higher planned nuclear refueling outage days and the timing of Illinois ZEC revenue recognition partly offset those factors; Constellation recognized $85 million of bank credits in the quarter compared with $200 million a year earlier, and Smith said the timing was already reflected in FY2026 guidance.

Dominguez said the company had signed approximately 920 megawatts of long-term nuclear agreements since the prior call. He said the contracts averaged 18.5 years and involved investment-grade customers, while Constellation had contracted roughly 30% of its clean baseload output under long-term agreements. Dominguez said the company would let customers decide whether and when to disclose their agreements, and he did not disclose contract pricing.

On demand and market rules, Dominguez said customers were gaining greater certainty as PJM and FERC worked on pathways for large loads. In the Q&A, analysts asked about the bilateral contracting process, customer procurement, co-location and the PJM backstop process. Dominguez said bilateral discussions remained confidential and said customers could use bilateral arrangements or other avenues rather than relying only on the backstop process. He said Constellation expected FERC clarity on co-location in the first to second quarter of 2027.

Dominguez said Calpine integration was progressing and teams were identifying additional opportunities. Smith said Constellation had agreed to sell the Brazos Valley Energy Center to LS Power for $860 million, subject to approvals, and that the sale would satisfy the remaining DOJ settlement obligations for the Calpine acquisition. Dominguez also said the company had deployed approximately $2.2 billion on share repurchases year to date.

Guidance

Constellation raised its FY2026 adjusted operating earnings guidance to $11.50–$12.50 per share from its prior range of $11.00–$12.00 per share. Shane Smith said the company would revisit its full-year outlook on the Q3 call after the summer.