CEG – Seeing a light at the end of the Baltimore tunnel

Research evidence excerpt

CEG – Seeing a light at the end of the Baltimore tunnel

May 11, 2026

Investment Conclusion

CEG's stock began trading in February 2022 and has continued to move higher on a combination of the broader AI

thematic, growing appreciation for nuclear, data center deal potential, and rising power prices. CEG has a price floor on

the entirety of its nuclear generation, plus the complementary gas-heavy Calpine business, with no ceiling to pricing

upside. We see the valuation as attractive at ~15x 2030 pro forma EPS without any pricing upside either from PPAs

or power curves. We expect a mix of nuclear and gas data center deals, mostly FTM, with Calpine's fleet providing

an enhanced customer offering (with some geothermal and storage too). CEG sees a 20%+ base EPS CAGR over

2026-2029, that should sustain at 10%+ longer-term on a rolling three-year-basis. Visibile drivers include nuclear

PTCs, long-term power contracts, and conservative pricing assumptions. On top of that, CEG sees enhanced EPS

making up 30-35% of total earnings longer-term driven by upside to market pricing, margins, and volumes. CEG is

investing $1.6B to restart the Crane/TMI nuclear plant and plans other growth capex, like nuclear uprates and gas

new build. Beginning in 2024, nuclear PTCs became effective, limiting downside to CEG's nuclear fleet with a floor

price starting at $43.75/MWh and growing with inflation through YE32. CEG's business is essentially a contractual

one with upside from inflation in the PTCs, higher power prices, FTM/BTM data center deals, premiums for nuclear's

carbon free attributes, and 24x7 matching. Thus far, CEG has long-term contracted cash flows at premium pricing via

Crane/MSFT, META/Clinton, NY ZECs, and ERCOT CCGTs with CyrusOne/KKR.

Valuation