Is Talen Energy Corp. overvalued or undervalued?

As of 8 May 2025, Talen Energy Corp. has moved from a fair to an expensive valuation grade. The company appears overvalued, particularly when considering its P/E ratio of 20, which is significantly higher than the peer average of 10.294. Additionally, Talen's EV to EBITDA stands at 8.76, while its EV to EBIT is 11.64, both indicating a premium compared to industry norms.
In terms of peer comparison, Talen Energy Corp. is notably more expensive than its competitors, with a P/E ratio that far exceeds the industry average. The company's return performance has been impressive, with a year-to-date return of 106.11% compared to the S&P 500's 12.22%, and a one-year return of 142.81% against the S&P 500's 17.14%. This strong performance, however, does not mitigate the fact that the stock is currently overvalued based on the available metrics.