Talen Energy (NASDAQ:TLN) & Pinnacle West Capital (NYSE:PNW) Critical Contrast

Pinnacle West Capital (NYSE:PNW) and Talen Energy (NASDAQ:TLN) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.

Volatility & Risk

Pinnacle West Capital has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, Talen Energy has a beta of 2, suggesting that its share price is 100% more volatile than the S&P 500.

Insider & Institutional Ownership

91.5% of Pinnacle West Capital shares are owned by institutional investors. Comparatively, 0.4% of Talen Energy shares are owned by institutional investors. 0.2% of Pinnacle West Capital shares are owned by insiders. Comparatively, 0.2% of Talen Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Pinnacle West Capital and Talen Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle West Capital	12.26%	9.60%	2.43%
Talen Energy	50.48%	8.59%	3.13%

Analyst Recommendations

This is a breakdown of recent recommendations for Pinnacle West Capital and Talen Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle West Capital	0	5	3	1	2.56
Talen Energy	0	0	12	0	3.00

Pinnacle West Capital currently has a consensus price target of $95.17, suggesting a potential upside of 1.00%. Talen Energy has a consensus price target of $241.09, suggesting a potential upside of 22.08%. Given Talen Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Talen Energy is more favorable than Pinnacle West Capital.

Earnings & Valuation

This table compares Pinnacle West Capital and Talen Energy”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle West Capital	$5.12 billion	2.19	$501.56 million	$5.22	18.05
Talen Energy	$2.07 billion	4.34	$613.00 million	$17.41	11.34

Talen Energy has lower revenue, but higher earnings than Pinnacle West Capital. Talen Energy is trading at a lower price-to-earnings ratio than Pinnacle West Capital, indicating that it is currently the more affordable of the two stocks.

Summary

Talen Energy beats Pinnacle West Capital on 9 of the 15 factors compared between the two stocks.

About Pinnacle West Capital

Pinnacle West Capital Corporation, through its subsidiary, provides retail and wholesale electric services primarily in the state of Arizona. The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities. Its transmission facilities include overhead lines and underground lines; and distribution facilities consist of overhead lines and underground primary cables. The company also owns and maintains transmission and distribution substations; and owns energy storage facilities. Pinnacle West Capital Corporation was incorporated in 1985 and is headquartered in Phoenix, Arizona.

About Talen Energy

Talen Energy Corporation is a U.S.-based energy and power generation company. The Company owns or controls approximately 16,000 megawatts of capacity in wholesale power markets, principally in the Northeast, Mid-Atlantic and Southwest regions of the United States. The Company generates and sells electricity, capacity and related products from power plants that use fuel sources, such as nuclear, natural gas and coal. The Company’s Susquehanna nuclear power plant has approximately two boiling water reactors with a combined capacity of over 2,600 megawatts. Its fossil fuel plants are located in Athens, Barney Davis, Bayonne, Brandon Shores, Brunner Island, Camden, Colstrip and Dartmouth, among others. It has an art energy trading center located in Allentown, Pennsylvania (PA), where it manages asset load obligations, fuel supply, capacity and related products, and all supporting physical or financial transactions for its electric generation portfolio.