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TransAlta
(NYSE:TA)
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Rating:48Neutral
Price Target:
C$17.50
▼(-9.33% Downside)
Action:Reiterated
Date:08/01/26
The score is held back primarily by mixed financial quality—elevated leverage and currently negative TTM earnings despite solid EBITDA and positive free cash flow. Technicals also detract as the stock trades below key moving averages. These risks are partially offset by a constructive earnings-call outlook featuring reiterated 2026 guidance, strong hedging support, and an accretive acquisition pipeline, but credit/outlook and power-price headwinds remain meaningful.
Positive Factors
Resilient cash generation and operating reliability
Strong quarterly EBITDA, positive free cash flow and high fleet availability demonstrate operating resilience. This supports debt service, reinvestment and ongoing portfolio maintenance, although sustaining capital and future cash-flow trends remain important.
Negative Factors
Elevated leverage limits financial flexibility
High leverage increases sensitivity to weaker power prices, operational setbacks and refinancing conditions. The negative S&P outlook adds credit pressure, potentially constraining capital allocation and raising the importance of asset recycling or cash-flow improvement.
Read all positive and negative factors
Positive Factors
Negative Factors
Resilient cash generation and operating reliability
Strong quarterly EBITDA, positive free cash flow and high fleet availability demonstrate operating resilience. This supports debt service, reinvestment and ongoing portfolio maintenance, although sustaining capital and future cash-flow trends remain important.
Read all positive factors
TransAlta (TA) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$5.49B
Dividend Yield1.55%
Average Volume (3M)1.68M
Price to Earnings (P/E)―
Beta (1Y)1.14
Revenue Growth-9.61%
EPS Growth54.17%
CountryCA
Employees1,350
SectorUtilities
Sector Strength65
IndustryIndependent Power Producers
Share Statistics
EPS (TTM)-0.26
Shares Outstanding316,025,180
10 Day Avg. Volume1,497,954
30 Day Avg. Volume1,681,078
Financial Highlights & Ratios
PEG Ratio0.13
Price to Book (P/B)3.69
Price to Sales (P/S)2.14
P/FCF Ratio12.99
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$24.43Price Target Upside26.57% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)0.31
Revenue Forecast (FY)C$2.11B
TransAlta Business Overview & Revenue Model
Company Description
TransAlta Corporation is an energy firm engaged in the ownership, operation, and enhancement of a diverse array of electricity-generating assets across Canada, the United States, and Australia. The company's activities are organized into four prim...
How the Company Makes Money
TransAlta makes money primarily by generating electricity and selling it under a mix of (1) long-term contracted arrangements and (2) merchant/market-based sales. Key revenue streams typically include: (a) Electricity sales under power purchase ag...
TransAlta Earnings Call Summary
Earnings Call Date:Jul 31, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 10, 2026
Earnings Call Sentiment Positive
The call conveyed solid operational execution (adjusted EBITDA of $291M, $143M free cash flow, 90.2% availability), strong hedging and an accretive US acquisition that together provide stable, near-term cash flow. These positives are balanced against continued weak Alberta spot prices (down ~27.5% YoY), a notable drop in hydro EBITDA (~31% YoY), and a negative S&P outlook. Management emphasized multiple levers to strengthen the balance sheet (asset recycling, Centralia FID, data center initiatives) and remained confident in 2026 guidance. Overall, the tone was constructive with clear strategic actions to mitigate current market weakness, though timing risks around AESO decisions and credit metrics remain.Positive Updates
Strong Operational and Financial Performance
Adjusted EBITDA of $291 million and free cash flow of $143 million ($0.47 per share) in Q2 2026; average fleet availability of 90.2%, demonstrating operational resilience despite challenging market conditions.
Negative Updates
Weaker Alberta Merchant Prices
Alberta spot prices averaged $29/MWh in Q2 2026, down from $40/MWh in Q2 2025 (a decline of ~$11/MWh or ~27.5%), driven by seasonally lower demand and strong supply, pressuring merchant revenues.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Operational and Financial Performance
Adjusted EBITDA of $291 million and free cash flow of $143 million ($0.47 per share) in Q2 2026; average fleet availability of 90.2%, demonstrating operational resilience despite challenging market conditions.
Read all positive updates
Company Guidance
Management reiterated confidence in achieving its 2026 guidance range, pointing to Q2 results of adjusted EBITDA of $291 million, free cash flow of $143 million ($0.47/share) and average fleet availability of 90.2%; expected sustaining capital of $140–$160 million in 2026; and a strong hedge book (~4.5 TWh hedged for the balance of 2026 and ~6.6 TWh for 2027 at an average $64/MWh). They noted Q2 Alberta spot averaged $29/MWh (vs. $40/MWh LY), realized Q2 prices of gas $68/MWh (134% premium to spot), hydro $36/MWh (24% premium), merchant wind $14/MWh, ~2.4 TWh of Q2 hedge realization at $63/MWh, and ~900 GWh of ancillary volumes at a 14% premium; the US$1.0 billion Colorado acquisition (expected close Q4 2026) will add ~$110 million/year of adjusted EBITDA and be immediately FCF‑accretive (not included in current guidance), while Centralia is on track for a Class 3 estimate by year‑end, FID in Q1 2027 and targeted in‑service in late 2028; Moody’s reaffirmed Ba1 (stable) and S&P BB+ (negative outlook).TransAlta Financial Statement Overview
Summary
Income Statement
48
Neutral
Balance Sheet
38
Negative
Cash Flow
63
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.27B | 2.41B | 2.85B | 3.35B | 2.98B | 2.72B |
| Gross Profit | 988.00M | 785.00M | 1.14B | 1.64B | 1.11B | 978.00M |
| EBITDA | 822.00M | 785.00M | 1.16B | 1.71B | 1.24B | 1.17B |
| Net Income | -23.00M | -138.00M | 229.00M | 695.00M | 50.00M | -537.00M |
Balance Sheet | ||||||
| Total Assets | 8.84B | 8.66B | 9.50B | 8.66B | 10.74B | 9.23B |
| Cash, Cash Equivalents and Short-Term Investments | 302.00M | 283.00M | 337.00M | 348.00M | 1.13B | 947.00M |
| Total Debt | 4.24B | 4.48B | 4.56B | 4.21B | 4.41B | 4.00B |
| Total Liabilities | 6.99B | 7.20B | 7.66B | 7.00B | 8.75B | 6.63B |
| Stockholders Equity | 1.78B | 1.40B | 1.75B | 1.54B | 1.11B | 1.58B |
Cash Flow | ||||||
| Free Cash Flow | 453.00M | 397.00M | 475.00M | 576.00M | -72.00M | 512.00M |
| Operating Cash Flow | 671.00M | 646.00M | 796.00M | 1.46B | 877.00M | 1.00B |
| Investing Cash Flow | -393.00M | -411.00M | -519.00M | -815.00M | -741.00M | -471.00M |
| Financing Cash Flow | -219.00M | -362.00M | -291.00M | -1.43B | 45.00M | -282.00M |
TransAlta Technical Analysis
Negative
19.30
Price Trends
18.75
Negative
18.39
Negative
18.39
Negative
Market Momentum
-0.45
Positive
37.68
Neutral
35.67
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 19.3 is above the 20-day moving average (MA) of 17.93, above the 50-day MA of 18.75, and above the 200-day MA of 18.39, indicating a bearish trend. The MACD of -0.45 indicates Positive momentum. The RSI at 37.68 is Neutral, neither overbought nor oversold. The STOCH value of 35.67 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 |
|---|---|---|---|---|---|---|---|
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
62 Neutral | C$7.76B | 46.78 | 3.90% | 2.57% | 4.81% | -58.62% | |
60 Neutral | C$5.57B | -38.45 | -3.46% | 4.17% | 15.39% | -180.64% | |
59 Neutral | C$14.67B | 331.63 | 1.88% | 3.29% | 1.16% | -89.49% | |
58 Neutral | C$10.45B | 124.07 | 2.31% | 3.85% | 28.71% | -83.38% | |
49 Neutral | C$6.20B | 32.04 | 3.20% | 4.17% | 5.62% | ― | |
48 Neutral | C$5.49B | -66.74 | -1.50% | 1.37% | -9.61% | 54.17% |
* Utilities Sector Average
TSE:TA
TransAlta
17.39
0.52
3.09%
TSE:ACO.X
ATCO Ltd Cl I NV
77.00
27.43
55.33%
TSE:CPX
Capital Power
66.98
9.53
16.58%
TSE:CU
Canadian Utilities A
53.62
16.61
44.89%
TSE:AQN
Algonquin Power & Utilities
8.04
0.35
4.52%
TSE:NPI
Northland Power
21.68
0.47
2.21%
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.