Nuclear energy is emerging as a key solution to the world's growing electricity demand and the transition to cleaner power sources. Unlike solar and wind, which rely on weather conditions, nuclear plants provide a constant, around-the-clock energy supply, ensuring uninterrupted power generation.

The energy sector is clearly undergoing a transition, with most utilities independently committing to reducing emissions in their electricity generation. Nuclear power stands out as one of the most dependable sources for producing large-scale clean energy. Nuclear plants require much less space to produce the same volume of electricity compared to other clean sources. All conventional energy sources produce waste while generating electricity. Nuclear energy is the only industry that regulates and safely stores its waste. Constellation Energy Corporation CEG and Vistra Energy Corp. VST are prominent U.S. utilities with significant nuclear operations.

Constellation Energy holds a pioneering position in clean, carbon-free power generation in the United States. It operates the largest fleet of nuclear power plants in the U.S., offering consistent, around-the-clock energy to its customers, with its average capacity factor being more than 94%. The company also issued green bonds to finance its nuclear power projects. Apart from nuclear energy, the company is also advancing in emerging areas like clean hydrogen and energy storage.

Vistra Energy is positioning itself as a key operator in the nuclear energy space. Through its acquisition of Energy Harbor in 2023, Vistra significantly expanded its nuclear portfolio, creating a new subsidiary, Vistra Vision, dedicated to zero-carbon generation. The company is also pursuing clean hydrogen initiatives tied to its nuclear operations, taking advantage of federal tax credits under the Inflation Reduction Act.

Both the above-mentioned stocks are key operators in the utility space. Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment for investors.

CEG & VST’s Earnings Growth Projections

The Zacks Consensus Estimate for Constellation Energy’s 2025 and 2026 earnings reflect year-over-year growth of 8.3% and 18.8%, respectively. Long-term (three to five years) earnings growth per share is pegged at 12.46%.

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The Zacks Consensus Estimate for Vistra Energy’s 2025 earnings indicates a year-over-year decline of 18% and year-over-year growth of 26.2% in 2026. Long-term earnings growth per share is pegged at 21.75%.

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Nuclear Energy Generation Capacity

Constellation Energy has a total generation capacity of nearly 31,676 MWhs at the end of 2024, out of that 22,068 MWhs or 69.7% comes from nuclear energy.

Vistra has a total generation capacity of 40.657 MWh at the end of 2024, out of which 6,448 MWh or 16% came from nuclear energy units.

Return on Equity (ROE)

ROE measures how efficiently the company is utilizing its shareholders’ funds to generate profits. CEG’s current ROE is 21.96% compared with VST’s ROE of 71.84%.

Long-term Capital Expenditure Plans

Constellation Energy’s strategic investment plans and focus on expanding its renewable portfolio drive its earnings performance. The company expects capital expenditures of nearly $3 billion and $3.5 billion for 2025 and 2026, respectively. Nearly 35% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels.

Vistra plans to invest nearly $2.3 billion in 2025 to maintain its nuclear assets, to procure nuclear fuel and for the solar and energy storage development.

CEG & VST’s Dividend Yield

Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for Constellation Energy is 0.74%, while the same for Vistra Energy is 0.80%. The dividend yields of both companies are lower than the Zacks S&P 500 Composite’s average of 1.68%.

Conclusion:

CEG's substantial nuclear capacity, efficient operations, and innovative financing through green bonds position it as a leader in the transition to clean energy. VST is also actively pursuing opportunities in clean energy to enhance its growth prospects.

Both CEG and VST are major energy providers with substantial investments in nuclear power generation, positioning them as key players in the clean energy transition.  Both stocks have huge potential in the energy space and can offer significant growth opportunities for investors.

Yet, our pick at present, considering the above parameters, is Constellation Energy, which currently carries a Zacks Rank #2 (Buy), while Vistra has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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