Talen Energy Stock To $258?
Talen Energy (TLN) stock has fallen 11% during the past day, and is currently trading at $371.66. Our multi-factor assessment suggests that it may be time to sell TLN stock. We have, overall, a pessimistic view of the stock, and a price of $258 may not be out of reach. We believe there is a near-equal mix of good and bad in TLN stock given its overall Moderate operating performance and financial condition. But keeping in mind its Very High valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very High |
| What you get: | |
| Growth | Inconsistent |
| Profitability | Moderate |
| Financial Stability | Strong |
| Downturn Resilience | N/A |
| Operating Performance | Moderate |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $17 Bil in market cap, Talen Energy provides energy and power generation and marketing services across North America through its subsidiary.
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[1] Valuation Looks Very High
| TLN | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 7.2 | 3.4 |
| Price-to-Earnings Ratio | 74.6 | 24.3 |
| Price-to-Free Cash Flow Ratio | 74.6 | 22.0 |
This table highlights how TLN is valued vs broader market. For more details see: TLN Valuation Ratios
[2] Growth Is Inconsistent
- Talen Energy has seen its top line shrink at an average rate of -25.0% over the last 3 years
- Its revenues have grown 5.1% from $2.2 Bil to $2.3 Bil in the last 12 months
- Also, its quarterly revenues grew 38.7% to $770 Mil in the most recent quarter from $555 Mil a year ago.
| TLN | S&P 500 | |
|---|---|---|
| 3-Year Average | -25.0% | 5.6% |
| Latest Twelve Months* | 5.1% | 6.4% |
| Most Recent Quarter (YoY)* | 38.7% | 7.3% |
This table highlights how TLN is growing vs broader market. For more details see: TLN Revenue Comparison
[3] Profitability Appears Moderate
- TLN last 12 month operating income was $290 Mil representing operating margin of 12.4%
- With cash flow margin of 18.5%, it generated nearly $434 Mil in operating cash flow over this period
- For the same period, TLN generated nearly $226 Mil in net income, suggesting net margin of about 9.6%
| TLN | S&P 500 | |
|---|---|---|
| Current Operating Margin | 12.4% | 18.8% |
| Current OCF Margin | 18.5% | 20.5% |
| Current Net Income Margin | 9.6% | 13.1% |
This table highlights how TLN profitability vs broader market. For more details see: TLN Operating Income Comparison
[4] Financial Stability Looks Strong
- TLN Debt was $3.0 Bil at the end of the most recent quarter, while its current Market Cap is $17 Bil. This implies Debt-to-Equity Ratio of 17.7%
- TLN Cash (including cash equivalents) makes up $497 Mil of $6.1 Bil in total Assets. This yields a Cash-to-Assets Ratio of 8.2%
| TLN | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 17.7% | 19.5% |
| Current Cash-to-Assets Ratio | 8.2% | 7.2% |
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