TransAlta (TA) AI Stock Analysis

• Market Cap: C$4.81B
• Dividend Yield: 1.46%
• Average Volume (3M): 1.13M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.96
• Revenue Growth: -11.00%
• EPS Growth: -227.07%
• Country: CA
• Employees: 1,165
• Sector: Utilities
• Sector Strength: 65
• Industry: Independent Power Producers
• EPS (TTM): -0.06
• Shares Outstanding: 296,800,000
• 10 Day Avg. Volume: 1,245,872
• 30 Day Avg. Volume: 1,133,824
• PEG Ratio: 0.18
• Price to Book (P/B): 3.69
• Price to Sales (P/S): 2.14
• P/FCF Ratio: 12.99
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$23.16
• Price Target Upside: 42.80% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 0.41
• Revenue Forecast (FY): C$2.14B

• Rating: 55 Neutral
• Price Target: C$16.50 ▲(1.73% Upside)
• Action: Reiterated Date: 03/02/26
• Date: Action: Reiterated 03/02/26

The score is held back primarily by weakened profitability and a highly leveraged balance sheet, despite strong operating/free cash flow. Technicals are moderately supportive, and the earnings call adds a modest позитиве tilt via reaffirmed guidance and extended credit facilities. Valuation is constrained by the negative P/E and only a modest dividend yield.

Positive Factors

Cash generation

TransAlta's strong 2025 operating cash flow (~$646M) and positive free cash flow (~$397M) show the business can convert operations into liquidity. Durable cash generation supports debt service, funding for capital projects and data-center investments, and provides a buffer during cyclical earnings periods.

Hedging program stabilizes revenue

A demonstrated 29% hedging premium and 1,900 GWh hedged at $72/MWh materially reduce merchant exposure. This durable risk-management approach smooths cash flows across market cycles, improving predictability for debt repayment and project financing and lowering volatility of future free cash flow.

Diverse asset base

TransAlta's mix of wind, hydro, natural gas and storage, combined with contracted PPAs and merchant sales, spreads operational and market risk. Structural diversification across fuels and revenue types enhances resilience to single-market shocks and positions the company to capture long-term growth in renewables and grid services.

Negative Factors

Elevated leverage

Debt-to-equity rising to ~3.2x elevates refinancing and interest-rate sensitivity risk. With equity declining, the capital structure leaves limited room for incremental borrowing and increases the probability that weaker earnings or higher rates will force asset sales, delay projects or constrain strategic investment over the medium term.

Weakened profitability

A swing to a 2025 net loss and sharp margin compression, even with positive EBITDA, signals below-the-line pressures (depreciation, interest or impairments). Persistent profitability weakness erodes retained earnings, reduces the equity cushion and makes sustaining dividends, reinvestment and deleveraging materially harder.

Revenue decline trend

A material revenue decline (~-15.5%) indicates structural top-line pressure from market conditions or contracting headwinds. Continued revenue erosion reduces scale economics, constrains margin recovery potential and increases reliance on asset sales or higher leverage to fund growth initiatives and transition projects like data centers.

TransAlta Business Overview & Revenue Model

Company Description

TransAlta Corporation owns, operates, and develops a diverse fleet of electrical power generation assets in Canada, the United States, and Australia. It operates through four segments: Hydro, Wind and Solar, Gas, and Energy Transition. owns and operates hydro, wind and solar, natural gas-fired, and coal-fired facilities. The company also engages in wholesale trading of electricity and other energy-related commodities and derivatives; and related mining operations and natural gas pipeline operations. It serves municipalities, medium and large industries, businesses, and utility customers. The company was founded in 1909 and is headquartered in Calgary, Canada.

How the Company Makes Money

TransAlta makes money primarily by generating electricity and selling it through a mix of (1) contracted arrangements and (2) merchant/market-based sales. (a) Contracted/PPAs: A portion of its facilities sell output under power purchase agreements or other contracted structures where pricing and volumes (or capacity/availability payments) are specified, providing more stable cash flows; revenue is recognized based on electricity delivered and/or contracted capacity or availability, depending on contract terms. (b) Merchant generation: For assets not fully contracted, TransAlta earns revenue by selling electricity into wholesale markets at prevailing spot and forward prices; earnings depend on power prices, dispatch levels, fuel costs (notably for natural gas plants), and plant performance. (c) Capacity and ancillary services (where applicable): In markets that compensate generators for being available or for grid support services, the company can earn additional revenue streams tied to capacity/availability and reliability services, subject to market rules and qualification. (d) Environmental and renewable attributes (where applicable): Some renewable generation may generate renewable energy credits or similar environmental attributes that can be sold separately or bundled with electricity under contracts, depending on jurisdictional programs and contract structures. (e) Hedging and trading activities: To manage exposure to commodity prices and volumetric risk, TransAlta may use financial hedges (e.g., power and fuel derivatives); these activities can affect reported revenue and earnings depending on market movements and accounting treatment, but are primarily intended to stabilize cash flows rather than represent a standalone growth business. Key factors influencing profitability include wholesale power prices, the contracted vs. merchant mix, fuel prices and heat rates for gas generation, hydrology and wind resource conditions for renewables, plant availability/outage performance, carbon and environmental regulation costs, and counterparty credit quality under contracts.

TransAlta Financial Statement Overview

Summary

Overall fundamentals are pressured: the income statement deteriorated into a 2025 net loss with sharp margin compression, and the balance sheet is highly leveraged with worsening debt-to-equity. Offsetting this, operating and free cash flow remained solid and improved in 2025, supporting liquidity despite weaker reported earnings.

Income Statement

Earnings quality and trend have weakened materially: revenue declined in 2024 and 2025 (2025 down ~3% year over year), and profitability swung from solid profits in 2023–2024 to a net loss in 2025. Margins also compressed sharply, with 2025 showing negative operating profitability despite still-positive EBITDA, suggesting higher depreciation/impairments, interest burden, or other below-the-line pressures. Strengths include a historically strong 2023 and a business model that can generate meaningful EBITDA, but the latest year’s loss and margin deterioration weigh heavily.

Balance Sheet

Leverage is elevated and has worsened recently: debt-to-equity moved higher to ~3.2x in 2025 from ~2.6x in 2024, while equity declined. Returns to shareholders also turned negative in 2025 following positive results in 2023–2024, reflecting both weaker earnings and a thinner equity cushion. The company has significant asset base support, but the capital structure looks aggressive for a period of earnings volatility, increasing refinancing and rate-sensitivity risk.

Cash Flow

Cash generation is a relative bright spot: operating cash flow remained healthy in 2025 (~$646M) and free cash flow was positive (~$397M) with strong growth versus the prior year. That said, cash flow has been inconsistent over the cycle (including negative free cash flow in 2022), and cash conversion versus accounting earnings is mixed, especially with 2025 posting a net loss. Overall, the business demonstrates the ability to generate cash, but stability is not yet best-in-class.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.41B	2.85B	3.35B	2.98B	2.72B
Gross Profit	785.00M	1.14B	1.64B	1.11B	978.00M
EBITDA	414.00M	1.16B	1.71B	1.24B	1.17B
Net Income	-138.00M	229.00M	695.00M	50.00M	-537.00M
Balance Sheet
Total Assets	8.66B	9.50B	8.66B	10.74B	9.23B
Cash, Cash Equivalents and Short-Term Investments	283.00M	337.00M	348.00M	1.13B	947.00M
Total Debt	4.48B	4.56B	4.21B	4.41B	4.00B
Total Liabilities	7.20B	7.66B	7.00B	8.75B	6.63B
Stockholders Equity	1.40B	1.75B	1.54B	1.11B	1.58B
Cash Flow
Free Cash Flow	397.00M	475.00M	576.00M	-72.00M	512.00M
Operating Cash Flow	646.00M	796.00M	1.46B	877.00M	1.00B
Investing Cash Flow	-411.00M	-519.00M	-815.00M	-741.00M	-471.00M
Financing Cash Flow	-362.00M	-291.00M	-1.43B	45.00M	-282.00M

TransAlta Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 16.22
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TA, the sentiment is Negative. The current price of 16.22 is below the 20-day moving average (MA) of 17.56, below the 50-day MA of 17.64, and below the 200-day MA of 18.04, indicating a bearish trend. The MACD of -0.31 indicates Positive momentum. The RSI at 33.15 is Neutral, neither overbought nor oversold. The STOCH value of 32.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TA.

TransAlta Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CPX	60 Neutral	C$9.57B	55.06	9.40%	4.44%	-2.99%	-32.11%
CU	58 Neutral	C$12.86B	97.60	8.84%	4.33%	-0.94%	25.64%
NPI	58 Neutral	C$5.64B	-28.57	-7.06%	6.80%	-4.86%	-86.64%
TA	55 Neutral	C$4.81B	-37.36	-8.84%	1.46%	-11.00%	-227.07%
ACO.X	54 Neutral	C$6.58B	42.21	3.20%	3.62%	7.75%	11.25%
AQN	50 Neutral	C$6.59B	25.55	3.88%	4.32%	-4.72%	96.98%

TransAlta Corporate Events

DOE Orders TransAlta’s Centralia Unit 2 to Stay Available for 90 More Days

TransAlta said its TransAlta Centralia Generation subsidiary has received an order from the U.S. Department of Energy requiring Centralia Unit 2 in Washington State to remain available for operation for an additional 90 days, until June 14, 2026. The company is assessing the directive and plans to work with state and federal authorities, highlighting the plant’s continued short-term role in supporting regional power reliability and underscoring ongoing policy and operational scrutiny of legacy generation assets.

The Order effectively extends the potential operating window of Centralia Unit 2 beyond what the company may have otherwise planned, which could influence near-term dispatch decisions and resource planning. While TransAlta has not detailed financial or operational impacts, the move signals regulators’ willingness to intervene to preserve grid reliability, and may have implications for how the company manages its conventional generation fleet during the energy transition.

The most recent analyst rating on (TSE:TA) stock is a Buy with a C$25.00 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.

TransAlta Adjusts Mix of Series A and B Preferred Shares Through Conversions

TransAlta has confirmed that none of its 9,629,913 outstanding Cumulative Redeemable Rate Reset First Preferred Shares, Series A, will be converted into Series B shares on March 31, 2026. However, 1,148,549 of its 2,370,087 outstanding Series B preferred shares will be converted into Series A shares on a one-for-one basis on that date.

Following these conversions, TransAlta will have 10,778,462 Series A preferred shares and 1,221,538 Series B preferred shares issued and outstanding. Both series will remain listed on the Toronto Stock Exchange, and the shift slightly increases the relative weight of fixed rate reset preferred shares in the company’s capital structure, which may influence investor perceptions of its funding mix and income profile.

The most recent analyst rating on (TSE:TA) stock is a Buy with a C$25.00 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.

TransAlta Sets February 27 Date to Unveil 2025 Results and 2026 Guidance

TransAlta Corporation will release its fourth quarter and full-year 2025 financial results before markets open on February 27, 2026, and will host a same-day conference call and webcast to discuss the results and provide its 2026 annual guidance. The event, targeted at investors, analysts, media and other stakeholders, will be accompanied by supporting materials, a replay and a transcript made available on the company’s website, underscoring TransAlta’s ongoing efforts to maintain transparency and engagement with the capital markets as it advances its power generation and sustainability strategy.

The most recent analyst rating on (TSE:TA) stock is a Hold with a C$17.00 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.