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Constellation Energy Corporation (CEG) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Constellation Energy Corporation (CEG)

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Intrinsic Value (DCF)

Current$341.20
→
Intrinsic$586.26
+72%
$386.42$586.26$983.27
Market implies 12% growth for 5 years
DCF analysis suggests CEG could have 72% upside at 25% growth — verify assumptions match your view.
At $341, the market prices in 12% annual cash flow growth — a moderate expectation aligned with historical trends (25%).
Range: Bear $386 → Bull $983. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$749$810$876$947
10%$502$543$586$633
12%$372$402$434$467
14%$292$315$340$366

Bull Case

  • Bull case ($983) offers 188% upside at 30% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (12%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($386) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$6.21B
Year 2$7.76B
Year 3$9.70B
Year 4$12.12B
Year 5$15.15B
Terminal$240.05B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$4.96BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Regulated returns may affect assumptions. See FAQ below for full methodology.

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Frequently Asked Questions

Is CEG stock undervalued or overvalued?
🟡 FAIRLY VALUED

CEG trades at $341.20, within 10% of our $393.43 intrinsic value estimate. At 9.5% WACC and 25.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $258.03 (bear) to $591.92 (bull).

What is CEG's intrinsic value?

Using a 5-year DCF model: Base FCF of $4.96B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $5.39B net debt and dividing by 0.32B shares: Bear $258.03 | Base $393.43 | Bull $591.92. Current price $341.20 implies +11% to base case.

How is CEG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($129.32B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.