11 Most Undervalued Utility Stocks to Buy Now

7. Talen Energy Corporation (NASDAQ:TLN)

Forward P/E: 12.74

On February 20, Morgan Stanley raised the firm’s price target on Talen Energy Corporation (NASDAQ:TLN) to $474 from $473 and maintained an Overweight rating. Morgan Stanley notes that utilities underperformed the S&P’s return this month. Previewing Q4 earnings, the firm expects some balance in the discussion of data center pipelines given increased affordability and political concerns.

On February 26, Talen Energy Corporation (NASDAQ:TLN) announced FY2025 adjusted EBITDA of $1.035 billion and adjusted free cash flow of $524 million, exceeding the high end of the company’s revised guidance issued last quarter. Reaffirmed 2026 guidance of adjusted EBITDA between $1.75 billion and $2.05 billion and adjusted free cash flow between $980 million and $1.18 billion. At the midpoint, this implies approximately 84% EBITDA growth and roughly 106% adjusted free cash flow growth versus FY2025 results.

Moreover, management increased the share repurchase program to $2 billion through 2028 and highlighted high free cash flow conversion characteristics of acquired assets, with management focused on maximizing adjusted free cash flow per share.

Founded in 2015 and headquartered in Houston, Texas, Talen Energy Corporation (NASDAQ:TLN) is an independent power producer and energy infrastructure company. Talen owns, operates, and optimizes high-quality power infrastructure in the U.S. Its plants generate power using a variety of fuels, ranging from zero-carbon energy like nuclear to natural gas, coal, and oil.