How Has Calpine Stock Performed Recently?
Weakness in merchant power stocks
Calpine (CPN) is one of the most beaten down stocks among US merchant power players. The stock has corrected more than 7.0% so far this year, while utilities have managed to gain nearly that much.
Calpine, a $4.0 billion electricity-generating business, and other independent power producers in the United States have been struggling for the last few years due to lower wholesale power prices and weak power demand. Their profits have been squeezed significantly, which has led to volatile stock movements.
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The above graph shows the comparative stock price performances of Calpine, utilities (XLU), and the broader markets (SPY) (SPX-INDEX). In the last year, Calpine has corrected nearly 25.0%, while the Utilities Select Sector SPDR ETF (XLU) has risen 8.0%.
NRG Energy (NRG), CPN’s biggest peer and the largest merchant power player, rose 40.0% during the same period. NRG Energy stock saw a huge rise after activist involvement in the company hinted at possible positive changes and the unlocking of value to shareholders.
Volatility compared to peers
Merchant power stocks’ volatile stock price movements make them somewhat risky. Calpine’s beta is above 1.0, while NRG Energy and Dynegy have betas around 1.3. Utilities generally have betas below 0.50. Low volatility stocks such as Southern Company (SO) and Duke Energy (DUK) generally provide more stable returns.