Critical Analysis: Gevo (NASDAQ:GEVO) vs. Talen Energy (NASDAQ:TLN)

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

Risk and Volatility

Gevo has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Talen Energy has a beta of 1.82, meaning that its stock price is 82% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gevo	-19.38%	-5.06%	-3.41%
Talen Energy	-0.63%	41.58%	6.00%

Insider & Institutional Ownership

35.2% of Gevo shares are owned by institutional investors. Comparatively, 0.4% of Talen Energy shares are owned by institutional investors. 7.1% of Gevo shares are owned by company insiders. Comparatively, 0.8% of Talen Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for Gevo and Talen Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gevo	1	2	2	0	2.20
Talen Energy	0	4	10	0	2.71

Gevo presently has a consensus price target of $2.88, indicating a potential upside of 76.38%. Talen Energy has a consensus price target of $475.08, indicating a potential upside of 27.58%. Given Gevo’s higher probable upside, research analysts clearly believe Gevo is more favorable than Talen Energy.

Earnings and Valuation

This table compares Gevo and Talen Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gevo	$160.58 million	2.47	-$33.84 million	($0.13)	-12.54
Talen Energy	$2.58 billion	6.91	-$219.00 million	($0.67)	-555.78

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

Summary

Talen Energy beats Gevo on 8 of the 14 factors compared between the two stocks.

About Gevo

Gevo, Inc. operates as a carbon abatement company. It operates through three segments: Gevo, Agri-Energy, and Renewable Natural Gas. The company focuses on transforming renewable energy into energy-dense liquid hydrocarbons that can be used as renewable fuels. It offers renewable gasoline and diesel, isobutanol, sustainable aviation fuel, renewable natural gas, isobutylene, ethanol, and animal feed and protein. The company was formerly known as Methanotech, Inc. and changed its name to Gevo, Inc. in March 2006. Gevo, Inc. was incorporated in 2005 and is headquartered in Englewood, Colorado.

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.