Critical Analysis: Talen Energy (NASDAQ:TLN) vs. Clearway Energy (NYSE:CWEN)

Talen Energy (NASDAQ:TLN) and Clearway Energy (NYSE:CWEN) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Talen Energy and Clearway Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Talen Energy	2	2	12	0	2.62
Clearway Energy	0	1	7	2	3.10

Talen Energy currently has a consensus price target of $458.69, indicating a potential upside of 35.45%. Clearway Energy has a consensus price target of $42.00, indicating a potential upside of 23.24%. Given Talen Energy’s higher probable upside, research analysts clearly believe Talen Energy is more favorable than Clearway Energy.

Earnings and Valuation

This table compares Talen Energy and Clearway Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Talen Energy	$2.58 billion	6.29	-$219.00 million	($5.54)	-61.13
Clearway Energy	$1.43 billion	4.90	$169.00 million	$0.76	44.84

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Talen Energy	-5.38%	43.32%	5.31%
Clearway Energy	5.78%	1.60%	0.55%

Institutional and Insider Ownership

0.4% of Talen Energy shares are held by institutional investors. Comparatively, 84.5% of Clearway Energy shares are held by institutional investors. 0.8% of Talen Energy shares are held by insiders. Comparatively, 0.5% of Clearway Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Talen Energy has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500. Comparatively, Clearway Energy has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Summary

Talen Energy beats Clearway Energy on 8 of the 15 factors compared between the two stocks.

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.

About Clearway Energy

Clearway Energy, Inc. operates in the renewable energy business in the United States. The company operates through Conventional and Renewables segments. It has approximately 6,000 net MW of installed wind, solar, and energy generation projects; and approximately 2,500 net MW of natural gas-fired generation facilities. The company was formerly known as NRG Yield, Inc. and changed its name to Clearway Energy, Inc. in August 2018. Clearway Energy, Inc. was incorporated in 2012 and is based in Princeton, New Jersey. Clearway Energy, Inc. is a subsidiary of Clearway Energy Group LLC.