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Talen Energy Gains 170% in a Year: Should You Buy the Stock Now?
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Shares of Talen Energy Corporation (TLN - Free Report) have soared an impressive 169.8% over the past year, outperforming the Zacks Alternative-Energy industry’s return of 57.3% as well as the broader Zacks Oils-Energy sector’s growth of 3.2%. It has also outpaced the S&P 500’s rise of 17.8% in the same period.
Image Source: Zacks Investment Research
Buoyed by the increasing worldwide adoption of clean energy across industries, TLN stock has been rallying on impressive quarterly operational performance with the company’s strong focus on generating energy from its zero-carbon nuclear and lower-carbon gas-fired facilities.
Similar stellar performances have been delivered by other industry players, such as Oklo Inc. (OKLO - Free Report) , Bloom Energy (BE - Free Report) and GEV Vernova (GEV - Free Report) , whose shares have surged 204.1%, 156.3% and 133.1%, respectively, over the past year.
What’s Been Pushing Up TLN Stock?
Talen Energy has made some milestone achievements over the past year that must have played the role of a significant catalyst in its share price growth story. Notably, in March 2024, the company sold its 960-megawatts (MW) nuclear-power data center campus, Cumulus Data Assets, to Amazon Web Services (“AWS”) for $650 million. Following this divestment, TLN recorded a $329 million gain in sales during the first nine months of 2024.
In September, the company announced that its board of directors has increased its share repurchase program to $1.25 billion. This reflects improved financial condition for TLN, which, in turn, must have enabled its management to fund the increased share repurchase.
TLN’s steady financial health can be further gauged from its improved adjusted free cash flow count, as evident in its fourth-quarter 2024 results. Adjusted free cash flow of $283 million as of Dec. 31, 2024, exceeded its guidance mid-point of $275 million. The figure also came in higher than $169 million worth of adjusted free cash flow generated during May-December 2023 (since the company emerged from bankruptcy and completed its restructuring in May 2023). Its operating revenues, as well as net income, also improved during the aforementioned period, further instilling investors’ confidence in the stock.
Will TLN Stock Continue With Its Rally?
Increasing data center growth across the globe, along with rising electricity consumption, particularly in emerging nations and developing economies, backed by strengthening economic activities and prosperity in these countries, has been boosting global electricity demand. Amid such rising electricity demand, the United States has become the world's largest producer of nuclear power, accounting for about 30% of the worldwide generation of nuclear electricity (as per the latest report by the World Nuclear Association).
To this end, it is imperative to mention that carbon-free nuclear comprises 50% or more of TLN’s annual generation, with its Susquehanna nuclear facility being the sixth largest nuclear-powered generation facility in the country. Thus, TLN’s long-term growth prospects in the nuclear power generation market remain strong.
In line with this, the Zacks Consensus Estimate for long-term (three-to-five-years) earnings growth rate is currently pegged at a solid 12.1%.
However, a quick sneak peek at its near-term estimates does not reveal a rosy picture.
Estimates for TLN Send Mixed Impulse
The Zacks Consensus Estimate for first-quarter and full-year 2025 sales suggests an improvement of 3.4% and 19.4%, respectively, year over year.
However, the same for TLN’s earnings implies a deterioration.
Nevertheless, the bottom-line estimate for first-quarter and full-year 2025 has moved up 3.4% and 1.3%, respectively, over the past 60 days. This indicates analysts’ strengthening confidence in the stock’s earnings capability.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Risks to Consider Before Investing in TLN
The company faces stringent regulatory challenges. In November 2024, the Federal Energy Regulatory Commission (“FERC”) rejected an amended interconnection agreement among PJM Interconnection (“PJM”), PPL Electric Utilities (“PPL”), and Talen, for an Amazon data center. The deal would have enhanced power supply from Talon Energy's Susquehanna plant to the data center, but FERC rejected it over concerns of potential adverse impacts on grid reliability and consumer costs. No doubt this rejection limited TLN’s potential revenue generation from its partnership with Amazon.
Talen had previously experienced financial challenges, including a bankruptcy filing in 2022. Its higher long-term debt-to-capital ratio (as can be witnessed below) compared to its industry raises concerns over its debt management and liquidity.
Image Source: Zacks Investment Research
TLN’s Impressive ROE
A quick sneak peek at the company’s return on equity (ROE) over the past year compared to that of its industry shows a bright scenario. TLN’s ROE is higher than that of its industry.
Image Source: Zacks Investment Research
What Should an Investor Do?
Investors interested in TLN stock can consider adding it to their portfolio now, considering its impressive ROE, year-over-year growth suggested by its sales estimates as well as stellar performance at the bourses over the past year.
Image: Bigstock
Talen Energy Gains 170% in a Year: Should You Buy the Stock Now?
Shares of Talen Energy Corporation (TLN - Free Report) have soared an impressive 169.8% over the past year, outperforming the Zacks Alternative-Energy industry’s return of 57.3% as well as the broader Zacks Oils-Energy sector’s growth of 3.2%. It has also outpaced the S&P 500’s rise of 17.8% in the same period.
Image Source: Zacks Investment Research
Buoyed by the increasing worldwide adoption of clean energy across industries, TLN stock has been rallying on impressive quarterly operational performance with the company’s strong focus on generating energy from its zero-carbon nuclear and lower-carbon gas-fired facilities.
Similar stellar performances have been delivered by other industry players, such as Oklo Inc. (OKLO - Free Report) , Bloom Energy (BE - Free Report) and GEV Vernova (GEV - Free Report) , whose shares have surged 204.1%, 156.3% and 133.1%, respectively, over the past year.
What’s Been Pushing Up TLN Stock?
Talen Energy has made some milestone achievements over the past year that must have played the role of a significant catalyst in its share price growth story. Notably, in March 2024, the company sold its 960-megawatts (MW) nuclear-power data center campus, Cumulus Data Assets, to Amazon Web Services (“AWS”) for $650 million. Following this divestment, TLN recorded a $329 million gain in sales during the first nine months of 2024.
In September, the company announced that its board of directors has increased its share repurchase program to $1.25 billion. This reflects improved financial condition for TLN, which, in turn, must have enabled its management to fund the increased share repurchase.
TLN’s steady financial health can be further gauged from its improved adjusted free cash flow count, as evident in its fourth-quarter 2024 results. Adjusted free cash flow of $283 million as of Dec. 31, 2024, exceeded its guidance mid-point of $275 million. The figure also came in higher than $169 million worth of adjusted free cash flow generated during May-December 2023 (since the company emerged from bankruptcy and completed its restructuring in May 2023). Its operating revenues, as well as net income, also improved during the aforementioned period, further instilling investors’ confidence in the stock.
Will TLN Stock Continue With Its Rally?
Increasing data center growth across the globe, along with rising electricity consumption, particularly in emerging nations and developing economies, backed by strengthening economic activities and prosperity in these countries, has been boosting global electricity demand. Amid such rising electricity demand, the United States has become the world's largest producer of nuclear power, accounting for about 30% of the worldwide generation of nuclear electricity (as per the latest report by the World Nuclear Association).
To this end, it is imperative to mention that carbon-free nuclear comprises 50% or more of TLN’s annual generation, with its Susquehanna nuclear facility being the sixth largest nuclear-powered generation facility in the country. Thus, TLN’s long-term growth prospects in the nuclear power generation market remain strong.
In line with this, the Zacks Consensus Estimate for long-term (three-to-five-years) earnings growth rate is currently pegged at a solid 12.1%.
However, a quick sneak peek at its near-term estimates does not reveal a rosy picture.
Estimates for TLN Send Mixed Impulse
The Zacks Consensus Estimate for first-quarter and full-year 2025 sales suggests an improvement of 3.4% and 19.4%, respectively, year over year.
However, the same for TLN’s earnings implies a deterioration.
Nevertheless, the bottom-line estimate for first-quarter and full-year 2025 has moved up 3.4% and 1.3%, respectively, over the past 60 days. This indicates analysts’ strengthening confidence in the stock’s earnings capability.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Risks to Consider Before Investing in TLN
The company faces stringent regulatory challenges. In November 2024, the Federal Energy Regulatory Commission (“FERC”) rejected an amended interconnection agreement among PJM Interconnection (“PJM”), PPL Electric Utilities (“PPL”), and Talen, for an Amazon data center. The deal would have enhanced power supply from Talon Energy's Susquehanna plant to the data center, but FERC rejected it over concerns of potential adverse impacts on grid reliability and consumer costs. No doubt this rejection limited TLN’s potential revenue generation from its partnership with Amazon.
Talen had previously experienced financial challenges, including a bankruptcy filing in 2022. Its higher long-term debt-to-capital ratio (as can be witnessed below) compared to its industry raises concerns over its debt management and liquidity.
Image Source: Zacks Investment Research
TLN’s Impressive ROE
A quick sneak peek at the company’s return on equity (ROE) over the past year compared to that of its industry shows a bright scenario. TLN’s ROE is higher than that of its industry.
Image Source: Zacks Investment Research
What Should an Investor Do?
Investors interested in TLN stock can consider adding it to their portfolio now, considering its impressive ROE, year-over-year growth suggested by its sales estimates as well as stellar performance at the bourses over the past year.
The company’s Zacks Rank #2 (Buy) also supports our investment thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.