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Transalta Corp. (TSE:TA)
TSX:TA
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TransAlta
(TSX:TA)
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Rating:49Neutral
Price Target:
C$19.50
▲(0.26% Upside)
TransAlta's overall stock score reflects significant challenges in financial performance and valuation, with a negative P/E ratio and high leverage. Technical indicators suggest a bearish trend, adding to the cautious outlook. However, the company shows resilience in cash flow generation and has a positive outlook for 2025, as highlighted in the earnings call. Improvements in operational efficiency and debt reduction are crucial for enhancing financial stability.
Positive Factors
Renewable Energy Transition
TransAlta's focus on transitioning to renewable energy sources positions it well for long-term growth, aligning with global sustainability trends and increasing demand for clean energy.
Effective Hedging Strategies
Effective hedging strategies enhance revenue stability and reduce exposure to volatile market prices, supporting consistent cash flow and financial performance.
Data Center Strategy Progress
Progress in the data center strategy indicates potential for new revenue streams and diversification, leveraging growing demand for data infrastructure.
Negative Factors
High Leverage
High leverage can strain financial flexibility and increase risk, especially if profitability does not improve, potentially impacting long-term stability.
Declining Revenue Trend
A declining revenue trend may indicate challenges in maintaining market share or competitiveness, affecting long-term growth prospects and financial health.
Profitability Challenges
Negative profitability suggests operational inefficiencies and can hinder reinvestment in growth initiatives, impacting long-term value creation.
TransAlta (TA) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$5.77B
Dividend Yield1.31%
Average Volume (3M)1.58M
Price to Earnings (P/E)―
Beta (1Y)1.01
Revenue Growth-11.00%
EPS Growth-227.07%
CountryCA
Employees1,165
SectorUtilities
Sector Strength65
IndustryIndependent Power Producers
Share Statistics
EPS (TTM)-0.02
Shares Outstanding296,700,000
10 Day Avg. Volume894,571
30 Day Avg. Volume1,581,706
Financial Highlights & Ratios
PEG Ratio-0.36
Price to Book (P/B)3.52
Price to Sales (P/S)2.16
P/FCF Ratio12.93
Enterprise Value/Market Cap1.87
Enterprise Value/Revenue4.31
Enterprise Value/Gross Profit13.22
Enterprise Value/Ebitda12.83
Forecast
1Y Price Target
$24.39Price Target Upside25.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)0.52
Revenue Forecast (FY)$2.57B
TransAlta Business Overview & Revenue Model
Company DescriptionTransAlta Corporation (TA) is a leading North American power producer based in Canada, primarily engaged in the generation of electricity through a diverse portfolio of energy sources including hydro, wind, natural gas, and coal. The company operates in various segments including electricity generation, wholesale marketing, and energy trading, serving residential, commercial, and industrial customers. TransAlta is committed to sustainability and is transitioning towards cleaner energy solutions, with a focus on reducing its carbon footprint and investing in renewable energy projects.
How the Company Makes MoneyTransAlta generates revenue primarily through the sale of electricity to wholesale and retail markets. The company operates a mix of generation facilities, which allows it to monetize power generated from various sources, including renewable energy, that typically have lower operational costs. Key revenue streams include power sales contracts, where TransAlta enters into long-term agreements to supply electricity at fixed or variable prices. Additionally, the company benefits from ancillary services such as capacity and balancing services that support grid stability. Partnerships with local utilities and participation in power purchase agreements enhance its revenue stability. Factors contributing to its earnings include market demand for electricity, regulatory policies favoring renewable energy, and operational efficiency in its power generation assets.
TransAlta Earnings Call Summary
Earnings Call Date:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 19, 2026
Earnings Call Sentiment Neutral
TransAlta demonstrated resilience in challenging market conditions with a strong financial performance and positive outlook. Significant progress was made in data center projects and financial flexibility was secured through credit facility extensions. However, decreased adjusted EBITDA and challenges in the Alberta energy market presented notable hurdles.Q3-2025 Updates
Positive Updates
Strong Financial Performance
TransAlta delivered adjusted EBITDA of $238 million and free cash flow of $105 million or $0.35 per share, with average fleet availability of 92.7%.
Positive Outlook for 2025
The company remains confident in achieving its 2025 guidance range, tracking to the lower end of the adjusted EBITDA range and the midpoint of free cash flow.
Significant Progress in Data Center Projects
TransAlta made progress on its data center projects in Alberta and Washington, with commercial negotiations advancing, and phase 1 of the AESO's data center Large Load Integration program allowing for 230 megawatts.
Credit Facility Extensions
TransAlta executed agreements to extend its committed credit facilities totaling $2.1 billion, ensuring financial flexibility.
Rezoning for Future Development
Parkland County approved the rezoning of over 3,000 acres for future data center development, facilitating new investment and economic growth.
Negative Updates
Decreased Adjusted EBITDA
Adjusted EBITDA decreased by $77 million compared to the third quarter of 2024 due to lower power prices and subdued market volatility.
Challenges in Alberta Energy Market
The Alberta spot price averaged $51 per megawatt hour, down from $55 in 2024, due to incremental generation and benign weather.
Delay in Data Center Customer Agreements
Discussions with prospective data center customers are progressing slower than anticipated, impacting the timeline for project announcements.
Company Guidance
During the TransAlta Corporation Third Quarter 2025 Conference Call, the company reported a solid performance with an adjusted EBITDA of $238 million and free cash flow of $105 million, equating to $0.35 per share. The fleet achieved an average availability of 92.7%. TransAlta is on track to meet its 2025 guidance range, expecting to hit the lower end of the adjusted EBITDA range and the midpoint of free cash flow. The company executed agreements to extend credit facilities totaling $2.1 billion, with a $1.9 billion syndicated facility maturing in 2029 and $240 million in bilateral facilities extended to 2027. TransAlta completed the sale of a 100% interest in the 48-megawatt Poplar Hill facility and a 50% interest in the 97-megawatt Rainbow Lake facility, as part of the Heartland Generation acquisition's regulatory requirements. The Alberta spot price averaged $51 per megawatt-hour, with TransAlta realizing a 29% premium through hedging strategies. For the remainder of the year, 1,900 gigawatt-hours are hedged at $72 per megawatt-hour. The company also noted adjustments to its Investor Day schedule, now planned for the first quarter of 2026, to provide detailed updates on key projects.TransAlta Financial Statement Overview
Summary
TransAlta faces challenges with declining revenues and profitability, as evidenced by negative net profit margins and high leverage. Despite these challenges, the company shows resilience in cash flow generation, with positive free cash flow growth. The balance sheet remains leveraged, posing potential risks if profitability does not improve.Income Statement
The income statement shows a declining revenue trend with a negative revenue growth rate of -5.61% in the TTM period. Gross profit margin remains relatively strong at 61.43%, but the net profit margin is negative at -4.59%, indicating profitability challenges. EBIT and EBITDA margins have also decreased compared to previous years, reflecting operational inefficiencies.45
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 2.86, indicating significant leverage. Return on equity is negative at -6.69%, reflecting poor profitability. However, the equity ratio is stable, suggesting a balanced asset structure despite high debt levels.50
Neutral
Cash Flow
Cash flow analysis shows a positive free cash flow growth rate of 11.59% in the TTM period, indicating improved cash generation. The operating cash flow to net income ratio is 0.33, suggesting moderate cash flow efficiency. However, the free cash flow to net income ratio is 0.51, indicating some challenges in converting income into free cash flow.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.51B | 2.85B | 3.35B | 2.98B | 2.72B | 2.10B |
| Gross Profit | 817.00M | 1.14B | 1.64B | 1.11B | 978.00M | 661.00M |
| EBITDA | 842.00M | 1.16B | 1.71B | 1.24B | 1.17B | 810.00M |
| Net Income | -115.00M | 229.00M | 695.00M | 50.00M | -537.00M | -287.00M |
Balance Sheet | ||||||
| Total Assets | 8.94B | 9.50B | 8.66B | 10.74B | 9.23B | 9.75B |
| Cash, Cash Equivalents and Short-Term Investments | 222.00M | 337.00M | 348.00M | 1.13B | 947.00M | 703.00M |
| Total Debt | 4.51B | 4.56B | 4.21B | 4.41B | 4.00B | 4.09B |
| Total Liabilities | 7.28B | 7.66B | 7.00B | 8.75B | 6.63B | 6.31B |
| Stockholders Equity | 1.58B | 1.75B | 1.54B | 1.11B | 1.58B | 2.35B |
Cash Flow | ||||||
| Free Cash Flow | 308.00M | 475.00M | 576.00M | -72.00M | 512.00M | 202.00M |
| Operating Cash Flow | 608.00M | 796.00M | 1.46B | 877.00M | 1.00B | 702.00M |
| Investing Cash Flow | -607.00M | -519.00M | -815.00M | -741.00M | -471.00M | -648.00M |
| Financing Cash Flow | -121.00M | -291.00M | -1.43B | 45.00M | -282.00M | 272.00M |
TransAlta Technical Analysis
Negative
19.45
Price Trends
21.46
Negative
19.28
Positive
16.38
Positive
Market Momentum
-0.57
Positive
39.46
Neutral
35.59
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 19.45 is below the 20-day moving average (MA) of 20.13, below the 50-day MA of 21.46, and above the 200-day MA of 16.38, indicating a neutral trend. The MACD of -0.57 indicates Positive momentum. The RSI at 39.46 is Neutral, neither overbought nor oversold. The STOCH value of 35.59 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
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | C$6.06B | 13.48 | 9.32% | 3.79% | 7.75% | 11.25% | |
67 Neutral | C$10.72B | 24.01 | 8.84% | 4.39% | -0.94% | 25.64% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | C$10.87B | 24.81 | 9.40% | 4.24% | -2.99% | -32.11% | |
60 Neutral | $4.51B | ― | -7.06% | 6.96% | -4.86% | -86.64% | |
54 Neutral | $6.24B | ― | 2.04% | 4.51% | -4.72% | 96.98% | |
49 Neutral | $5.77B | ― | -8.42% | 1.31% | -11.00% | -227.07% |
* Utilities Sector Average
TSE:TA
TransAlta
19.45
1.27
7.00%
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TSE:NPI
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TransAlta Corporate Events
Business Operations and Strategy
TransAlta Announces 2025 Investor Day to Unveil Strategic Priorities
Neutral
Sep 18, 2025
TransAlta Corporation announced its 2025 Investor Day event, scheduled for November 18, 2025, in Toronto, offering both in-person and live webcast attendance. The event will feature presentations from top executives, providing insights into the company’s strategic priorities, financial outlook, and growth objectives, reflecting its commitment to transparency and engagement with the investment community.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.