TLN Stock Trades Above 50 & 200-Day SMAs: How to Play It Now?

Talen Energy Corporation TLN is trading above its 50-day and 200-day simple moving averages (SMAs), signaling a bullish trend. TLN shares have gained significantly in the past 12 months.

Talen Energy is capitalizing on acquisitions, long-term power purchase agreements, strong demand in its service area and systematic hedging to protect itself from fluctuation in prices.

TLN’s 50 & 200-Day SMAs

The 50-day and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. It is considered particularly important, as this is the first marker of an uptrend or downtrend of the stocks.

Shares of Talen Energy have registered an upsurge of 158.7% in the past year compared with the Zacks Alternative Energy - Other industry’s rally of 52.2%. The company has also outperformed the Zacks Oil & Energy sector’s return of 0.5% and the S&P 500’s rally of 16.5% in the same time frame.

Another company operating in the same industry, Nano Nuclear Energy NNE, has skyrocketed 247.6% in the past 12 months.

Price Performance (1 Year)

Should investors add TLN to their portfolio solely because of its ongoing price gains? Let us take a closer look at the key factors that can help determine whether now is the right time to consider investing in the stock.

Factors Boosting TLN’s Performance

Talen Energy owns and operates 10.7 gigawatts (“GW”) of power generation assets across the United States. The company’s planned acquisitions of the Moxie Freedom Energy Center and the Guernsey Power Station, which are both high-quality, highly efficient combined-cycle gas turbine facilities, will strengthen and complement its existing portfolio.

Following the acquisitions, Talen Energy’s total generation capacity is expected to rise to 14 GW. These strategically located assets are positioned in key markets and are expected to enhance Talen Energy’s overall performance.

Talen Energy has entered a long-term, fixed-price power purchase agreement with Amazon AMZN to supply carbon-free electricity from its Susquehanna nuclear power plant to Amazon Web Services data centers in the region. Under the expanded agreement, Talen Energy will deliver up to 1,920 megawatts of nuclear power to Amazon through 2042, with options to extend the contract further.

This long-term arrangement is expected to substantially reduce Talen Energy’s market exposure while providing a stable, recurring revenue stream and enhancing the company’s balance sheet flexibility through contracted cash flows.

Talen Energy is well-positioned to benefit from increasing electricity demand in the PJM Interconnection region by capitalizing on its diversified generation portfolio and strategically expanding its capacity through acquisitions.

Talen Energy uses hedging to protect against commodity price volatility, which locks in future earnings and cash flows. The company has hedged a significant portion of its production volume and nuclear fuel needed for its units to protect itself from future fluctuation in fuel prices.

Talen Energy’s Earnings Estimates

The Zacks Consensus Estimate for Talen Energy’s 2025 earnings per share indicates a 38.67% year-over-year fall, while that for 2026 earnings per share suggests a surge of 300.2%.

The Zacks Consensus Estimate for Nano Nuclear Energy’s fiscal 2025 and 2026 earnings per share implies year-over-year declines of 207.69% and 47.92%, respectively.

TLN Stock Returns Better Than Its Industry

The return on invested capital (“ROIC”) measures how well a company generates returns on the money it invests. ROIC is a key indicator of a company's profitability and operational efficiency. The ROIC of the company indicates that it is investing money more efficiently than its peers in the industry.

Talen Energy’s ROIC has outperformed the industry average in the trailing 12 months. ROIC for TLN was 9.27% compared with the industry average of 1.85%.

Talen Stock Trades at a Discount

TLN is currently trading at a discounted valuation compared with its industry, with its forward 12-month price-to-earnings (P/E) ratio at 22.83X. The industry is currently trading at 23.88X.

TLN Increases Shareholder Value

Talen Energy continues to enhance shareholder value through its ongoing share repurchase program. Since the beginning of 2024, the company has bought back nearly 14 million shares under its $1-billion repurchase authorization, which remains in effect through the end of 2026. Talen Energy remains committed to returning capital to shareholders and aims to maintain annual share repurchases of nearly $500 million during the post-acquisition deleveraging period.

Summing Up

Talen Energy continues to deliver stable performance, driven by growing demand for clean power in its service regions and its capability to offer a high volume of electricity to meet customer demand.

With strong share price momentum and ROIC that exceeds the industry average, Talen Energy presents an appealing opportunity for investors.

However, given the projected year-over-year decline in 2025 earnings per share, we suggest investors wait and look for a better entry point in this Zacks Rank #3 (Hold) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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