Is Constellation Energy Corp. overvalued or undervalued?

As of 23 May 2025, the valuation grade for Constellation Energy Corp. has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently considered overvalued based on its financial ratios, with a P/E ratio of 26, an EV to EBITDA of 13.34, and a PEG ratio of 0.23. These figures suggest that the stock is trading at a premium compared to its earnings growth potential.
In comparison to its peers, Constellation Energy's P/E ratio is lower than that of NextEra Energy, Inc. at 35.78, but higher than The Southern Co. at 22.70. Additionally, its EV to EBITDA ratio is more favorable than NextEra's 18.38 but less favorable than The Southern Co.'s 12.97. The company's strong ROCE of 25.06% and ROE of 27.78% highlight its operational efficiency, yet the overall valuation metrics suggest that it is overvalued in the current market context. Notably, Constellation Energy has outperformed the S&P 500 with a year-to-date return of 40.9% compared to the index's 2.44%, reinforcing the notion of heightened market expectations.