r/valueinvesting
Why i think CEG is a good value play
Author views CEG as a strong value play, citing high ROE, solid margins, clean balance sheet, and accretive Calpine acquisition.
- Strong profitability and margins with 24.2% ROE and expanding EBITDA margins.
- Solid capital structure with reasonable debt-to-capital ratio and good liquidity.
- Significant growth runway driven by 20%+ long-term EPS targets and accretive Calpine acquisition.
I continue to try and analyze stocks that I think are good values, and I came across CEG. I cant remember when I came across them, but I started reading about them because I think nuclear energy is going to be the most viable clean energy and CEG is USA's biggest producer.
As of today, they sit at $249.05 which is right next to its 52 week low.
Before looking at the data and I thought it looked pretty good
- High-Level Profitability & Margins
Return on Equity (ROE): Sits at 24.2%, demonstrating that management is effective at generating profits from shareholders’ equity.
Net Margin: 12.7%
Normalized EBITDA Margin: Has risen from 10.8% to 22.9% over the past four years.
Earnings Power: 1Q26 EPS grew 28% year-over-year.
- Solid Capital Structure
Debt-to-Capital Ratio: Sitting at a reasonable 37.7%.
Current Ratio: 1.53, indicating short-term liquidity to cover obligations.
- Valuation vs. Growth Runway
1-Year EPS Growth Forecast: 23.54%
Long-Term Growth: They are targeting rolling three-year base EPS growth of 10%, with total long-term growth goals of 20%+ through 2029.
They recently took in Calpine which is projected to be immediately accretive, boosting 2026 EPS by \~20% and adding at least $2.00 per share through 2029.
The Bottom Line
CEG gives the safety of a utility backed by a massive nuclear fleet (generating 85% of its total revenue), but with the growth metrics of a tech infrastructure provider. With a 24% ROE, a 23% short-term EPS growth forecast, and a clean balance sheet, buying the dip here looks like a great long-term play.