American Electric Power (NASDAQ:AEP – Get Free Report) and Talen Energy (OTCMKTS:TLNE – Get Free Report) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.
Insider & Institutional Ownership
75.2% of American Electric Power shares are held by institutional investors. Comparatively, 0.4% of Talen Energy shares are held by institutional investors. 0.1% of American Electric Power shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares American Electric Power and Talen Energy’s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Electric Power | $19.00 billion | 2.41 | $2.21 billion | $5.39 | 16.12 |
| Talen Energy | $2.55 billion | 2.77 | $613.00 million | N/A | N/A |
Analyst Recommendations
This is a summary of recent ratings and recommmendations for American Electric Power and Talen Energy, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Electric Power | 1 | 5 | 6 | 0 | 2.42 |
| Talen Energy | 0 | 0 | 3 | 0 | 3.00 |
American Electric Power currently has a consensus target price of $88.62, suggesting a potential upside of 1.99%. Talen Energy has a consensus target price of $101.00, suggesting a potential downside of 15.73%. Given American Electric Power’s higher probable upside, research analysts clearly believe American Electric Power is more favorable than Talen Energy.
Profitability
This table compares American Electric Power and Talen Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Electric Power | 14.60% | 11.23% | 2.93% |
| Talen Energy | N/A | 1.93% | 0.67% |
Summary
American Electric Power beats Talen Energy on 9 of the 11 factors compared between the two stocks.
About American Electric Power
American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.
About Talen Energy
Talen Energy Corporation, an independent power producer and infrastructure company, produces and sells electricity, capacity, and ancillary services into wholesale power markets in the United States. The company operates nuclear, fossil, solar, and coal power plants. It is also developing battery storage projects. The company owns and operates approximately 10.7 GW of power infrastructure. Talen Energy Corporation is headquartered in Houston, Texas.
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