Talen Energy Corp

Where It Passes

Where It Falls Short

• Profitability0% pass✓ 1✗ 34▾

  No clean pass — all 16 investors flag at least one profitability criterion

  Positive EPS (10 years)2/8 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)2/8 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-0.2%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-38.0M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE-16.1%

  ✗Lynch> 15%

  EBIT / Enterprise Value0.3%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=0.3%, ROC=0.7%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-2.01%

  ✗PiotroskiROA > 0

  ROA Change YoY16.34% -> -2.01% (delta: -18.35%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=6.46%, ROA=-2.01%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue-5.9%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity-16.1%

  ✗Dreman> 12%

  Margin of SafetyP/B=15.7x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-1.3% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency2/6 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue2.0%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity-16.1%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trend

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization-1.55%; #3485/6340 (top 55.0%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity-16.08%; #3597/5226 (top 68.8%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1228; #3731/5884 (top 63.4%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years2/5 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Debt & Leverage0% pass✗ 15▾

  All 12 investors flag TLN's debt & leverage

  LT Debt vs Net Current AssetsLT Debt $9.5B vs NCA $-138.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 6.23, IC: -0.4x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity6.06

  ✗Lynch< 0.33

  Cash - Long-term Debt$-9.2B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change48.92% -> 62.19%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.89

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity6.06

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt Levels6.06

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=-0.4x, D/EBITDA=36.0x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity6.06

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-6.0563; #4096/4210 (top 97.3%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation0% pass✗ 28▾

  All 13 investors flag TLN's valuation

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio15.7x

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value0.3%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=0.3%, ROC=0.7%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)24.4x

  ✗Dreman< 8x

  Price / Book Value per Share15.7x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessOE Yield=-0.2%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldFCF Yield=3.7%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=15.7x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share28.4x

  ✗Ackman<= 25

  Price vs. Trailing Low188% of trailing low ($199.67)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization-1.55%; #3485/6340 (top 55.0%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.0966; #4767/6449 (top 73.9%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share15.72x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-48.9%

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.2416; #3586/5247 (top 68.3%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+2.42%; #2176/4519 (top 48.2%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+0.96%; #2595/6202 (top 41.8%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✓ 1✗ 12▾

  No clean pass — all 8 investors flag at least one growth criterion

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: 20.2% vs Rev: 71.9%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency2/6 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth2.4%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trend

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency0% pass✗ 11▾

  All 8 investors flag TLN's efficiency

  Current Ratio0.89

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)2.5%

  ✗Buffett> 10%

  ROIC - WACC-7.5%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)0.7%

  ✗Greenblatt> 25%

  Current Ratio Change YoY2.29 -> 1.28

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.35x -> 0.24x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities0.89

  ✗Dreman> 1.5

  Return on Invested Capital0.6%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=unavailable; FY2024: ROIC=4.1%; FY2025: ROIC=-0.9%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROICN/A (non-positive net income)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/4 years above 12% (latest -0.9%)

  ✗SleepROIC > 12% in a majority of years
• Valuation models0% pass✗ 4▾

  TLN overvalued: all 4 models price fair value below $376.01 (median $147.89)

  Greenblatt fair value$11.76

  ✗Greenblatt-3097.4% margin vs $376.01

  Munger fair value$148.16

  ✗Munger-153.8% margin vs $376.01

  Pabrai fair value$147.62

  ✗Pabrai-154.7% margin vs $376.01

  Ackman fair value$186.58

  ✗Ackman-101.5% margin vs $376.01
• Verdicts7% pass✓ 1✗ 14▾

  Split decision: 13 FAIL · 2 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (0/9)✗LynchFAIL (2/7)✗GreenblattRank #1811✗PiotroskiFAIL (F-Score 3)✗DremanFAIL (1/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (1/5)✗AckmanFAIL (1/9)✗TempletonFAIL (1/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (1/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow50% pass✓ 6✗ 6▾

  5 of 10 pass — Buffett, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy$-38.0M

  ✗BuffettPositive and growing

  FCF Positive and Growing$396.0M

  ✓LynchPositive and growing

  Operating Cash Flow$704.0M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=6.46%, ROA=-2.01%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)24.4x

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=3.7%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive4/6 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap2.3%

  ✗Ackman>= 4%

  Price / FCF per Share28.4x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency6/6 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$396.0M

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+2.42%; #2176/4519 (top 48.2%)

  ✗OshaughnessyTop 10% of eligible cross-section