QS Research · Michael Burry's Scion Capital analyst template · 2006
Talen Energy Corp (TLN)
As of 2026-11-10 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -5% · downside -99% · upside +80%
At today's 49.5x EV/EBITDA (N25), the section-13 cycle-average EBITDA of $491.3M gives EV of $24.32B and, after $9.26B net debt, equity of $15.06B or about $346/share, -4.7% versus $363.13; TTM EBITDA is $506.0M (N13), so normalization is not doing much of the work. Downside uses the FY2025 trough EBITDA of $189.0M at the same 49.5x, nearly wiping out equity; upside uses the FY2022 peak EBITDA of $761.0M and yields about $653/share, +79.8%. The market is not missing an obvious cash-flow bargain: base value is close to price, but leverage makes the distribution very wide, so the rule is not met. This is a watch, not a long or short; the key question is whether 2026-2027 guidance of $2.05-2.20B/$2.50-2.85B Adjusted EBITDA proves a new run-rate rather than a peak.
Key numbers
- Share price: $363.13
- Market cap: $15.80B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $4.88B
- EV / EBITDA (TTM): 49.5x
- Price / book: 10.00x
The 15 boxes
- ✓ 1. Long-form business notes
Talen is a mid-Atlantic wholesale generator whose earnings rest on one nuclear station (Susquehanna) plus a shrinking coal fleet, selling energy, capacity and ancillary services at FERC market-based rates into PJM, with Susquehanna also contracted to AWS under a long-term PPA. The XBRL cycle is violent: revenue $3.21B in FY2022, $1.57B in FY2024, $2.52B in FY2025, with operating income of $241.0M, $226.0M and -$90.0M in those same years. Cash does not track reported earnings — FY2025 operating cash flow was $704.0M against a -$90.0M operating loss and a -$219.0M net loss — so any cycle-normalized valuation has to be built on cash flow and D&A-adjusted operating earnings, not net income. The sources contain no quarterly, nine-month or TTM figures at all.
- ✓ 2. Competitive advantage
No durable moat is disclosed: PJM is a competitive wholesale market where Talen sells an undifferentiated commodity against gas, coal, nuclear, renewables, marketers and financial institutions, and the record shows no cost protection - operating income was $241.0M in FY2022, $226.0M in FY2024 and -$90.0M in FY2025. What substitutes for an advantage is contracted and backstopped revenue (AWS PPA, Maryland RMR to May 2029, Nuclear PTC), 90% ownership of the Susquehanna nuclear licences running to 2042/2044, and a cleared capacity position of 8,745 MW at $333.44/MWd for 2027/2028. Scale is being bought with debt - $3.8B for Freedom and Guernsey in November 2025, with roughly $2.55B of new debt plus $900M of stock contemplated for Cornerstone - not earned organically.
- ✓ 3. 10-Q takeaways
The Q3 2026 10-Q shows a much larger, higher-priced fleet: operating revenues of $1,327M vs $812M in Q3 2025 and Adjusted EBITDA of $669M vs $363M, yet operating income was flat at $255M vs $263M because of a $(183)M unrealized derivative loss against a $42M gain a year earlier. Strip the one-offs — a $66M Keystone sale gain in Q3 2026, $(77)M of make-whole payments and $130M of nuclear decommissioning trust gains in the nine-month column — and recurring economics still improved sharply: nine-month Adjusted EBITDA $1,516M vs $653M, Adjusted Free Cash Flow $995M vs $232M. The step-up is mostly acquired capacity plus higher PJM energy and capacity prices, not organic growth, and it carries a much heavier interest bill ($481M vs $203M for nine months) and lower cash on hand. Guidance is numeric and rising: 2026 Adjusted EBITDA reaffirmed at $2,050–$2,200M, with 2027 introduced at $2,500–$2,850M.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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