Talen Energy Corp (NASDAQ: TLN)

Sector: Utilities Industry: Utilities - Independent Power Producers CIK: 0001622536
Market Cap 17.14 Bn
P/B 11.67
P/E 75.84
P/S 7.45
ROIC (Qtr) 4.26
Div Yield % 0.00
Rev 1y % (Qtr) 24.92
Total Debt (Qtr) 2.99 Bn
Debt/Equity (Qtr) 2.03
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About

Investment thesis

Bull case

  • Healthy cash reserves of 497M provide 29.24x coverage of short-term debt 17M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong operating cash flow of 434M provides 2.80x coverage of SG&A expenses 155M, showing efficient operational cost management.
  • Robust tangible asset base of 6.10B provides 10.32x coverage of working capital 591M, indicating strong operational backing.
  • Tangible assets of 6.10B provide robust 24.58x coverage of other current liabilities 248M, indicating strong asset backing.
  • Operating cash flow of 434M provides solid 0.95x coverage of current liabilities 457M, showing strong operational health.

Bear case

  • Operating cash flow of 434M barely covers its investment activities of (210M), with a coverage ratio of -2.07, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 497M provide limited coverage of acquisition spending of (12M), which is -41.42x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 434M provides minimal -18.08x coverage of tax expenses of (24M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of 456M show weak coverage of depreciation charges of 277M, with a 1.65 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 277M relative to operating cash flow of 434M, which is 0.64x suggests significant maintenance capital requirements affecting free cash flow.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Utilities - Independent Power Producers
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VST Vistra Corp. 73.36 Bn -53.28 5.34 17.66 Bn
2 NRG Nrg Energy, Inc. 46.15 Bn 44.25 4.80 12.11 Bn
3 TLN Talen Energy Corp 17.14 Bn 75.84 7.45 2.99 Bn
4 KEN Kenon Holdings Ltd. 4.39 Bn 9.20 5.46 1.38 Bn
5 TAC Transalta Corp 3.50 Bn -28.96 1.95 2.66 Bn
6 DGXX Digi Power X Inc. 0.09 Bn -6.97 2.74 0.00 Bn
7 PAM Pampa Energy Inc. 0.00 Bn 0.00 0.00 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.29 1.83
EV to Cash from Ops. EV/CFO 46.23 49.01
EV to Debt EV to Debt 6.72 3.50
EV to EBIT EV/EBIT 44.00 5.95
EV to EBITDA EV/EBITDA 36.41 35.45
EV to Free Cash Flow [EV/FCF] EV/FCF 88.77 12.20
EV to Market Cap EV to Market Cap 1.17 1.12
EV to Revenue EV/Rev 8.73 5.24
Price to Book Value [P/B] P/B 11.67 0.88
Price to Earnings [P/E] P/E 75.84 6.68
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.64
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.42
Dividend per Basic Share Div per Share (Qtr) 0.00 0.40
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.07
Interest Coverage Int. cover (Qtr) 1.80 69.73
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -1.46 -12.19
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -56.10 146.90
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -3.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -61.14 5.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -62.87 -128.84
EBIT Growth (1y) % EBIT 1y % (Qtr) -71.50 -6.04
EBT Growth (1y) % EBT 1y % (Qtr) -84.90 -8.31
EPS Growth (1y) % EPS 1y % (Qtr) -73.44 -17.95
FCF Growth (1y) % FCF 1y % (Qtr) -14.07 18.34
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.15 7.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.38 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 1.09 1.07
Current Ratio Curr Ratio (Qtr) 2.29 2.39
Debt to Equity Ratio Debt/Equity (Qtr) 2.03 2.48
Interest Cover Ratio Int Coverage (Qtr) 1.80 69.73
Times Interest Earned Times Interest Earned (Qtr) 1.80 69.73
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 31.90 30.25
EBIT Margin % EBIT Margin % (Qtr) 19.83 15.08
EBT Margin % EBT Margin % (Qtr) 8.79 7.19
Gross Margin % Gross Margin % (Qtr) 32.20 26.28
Net Profit Margin % Net Margin % (Qtr) 9.80 5.55