Critical Review: Talen Energy (NASDAQ:TLN) & Pampa Energía (NYSE:PAM)

Talen Energy (NASDAQ:TLN) and Pampa Energía (NYSE:PAM) are both mid-cap energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Insider and Institutional Ownership

0.4% of Talen Energy shares are held by institutional investors. Comparatively, 12.8% of Pampa Energía shares are held by institutional investors. 0.2% of Talen Energy shares are held by company insiders. Comparatively, 55.5% of Pampa Energía shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Talen Energy has a beta of 1.93, meaning that its share price is 93% more volatile than the S&P 500. Comparatively, Pampa Energía has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Talen Energy and Pampa Energía, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Talen Energy	0	0	12	0	3.00
Pampa Energía	0	3	1	0	2.25

Talen Energy currently has a consensus price target of $240.18, indicating a potential upside of 21.28%. Pampa Energía has a consensus price target of $71.63, indicating a potential upside of 2.96%. Given Talen Energy’s stronger consensus rating and higher possible upside, equities analysts clearly believe Talen Energy is more favorable than Pampa Energía.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Talen Energy	50.48%	8.59%	3.13%
Pampa Energía	19.86%	12.15%	6.57%

Earnings and Valuation

This table compares Talen Energy and Pampa Energía”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Talen Energy	$2.07 billion	4.35	$613.00 million	$17.41	11.38
Pampa Energía	$1.88 billion	2.02	$302.00 million	$11.30	6.16

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

Summary

Talen Energy beats Pampa Energía on 9 of the 14 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 Pampa Energía

Pampa Energía S.A. operates as an integrated power company in Argentina. The company operates through Electricity Generation, Oil and Gas, Petrochemicals, and Holding and Other Business segments. It generates electricity through thermal plants, hydroelectric plants, and wind farms with a 5,332 megawatt (MW) installed capacity. The company also explores for and produces oil and gas in the provinces of Neuquén and Río Negro. In addition, it produces petrochemicals, such as styrene, synthetic rubber, and polystyrene. Further, the company operates and maintains a 22,391 km high-voltage electricity transmission network in Argentina. Additionally, it holds a concession for the transportation of natural gas with 9,248 km of gas pipelines in the center, west, and south of Argentina; and processes and sells natural gas liquids in Bahía Blanca in the Province of Buenos Aires, as well as offers related advisory services. The company was formerly known as Pampa Holding S.A. and changed its name to Pampa Energía S.A. in September 2008. Pampa Energía S.A. was incorporated in 1945 and is based in Buenos Aires, Argentina.