TransAlta (TA) AI Stock Analysis

• Market Cap: $5.08B
• Dividend Yield: 1.44%
• Average Volume (3M): 1.56M
• Price to Earnings (P/E): 21.5
• Beta (1Y): 0.84
• Revenue Growth: -20.91%
• EPS Growth: -127.48%
• Country: CA
• Employees: 1,165
• Sector: Utilities
• Sector Strength: 81
• Industry: Independent Power Producers
• EPS (TTM): 0.18
• Shares Outstanding: 296,400,000
• 10 Day Avg. Volume: 1,230,657
• 30 Day Avg. Volume: 1,564,409
• PEG Ratio: -0.36
• Price to Book (P/B): 3.52
• Price to Sales (P/S): 2.16
• P/FCF Ratio: 12.93
• Enterprise Value/Market Cap: 1.89
• Enterprise Value/Revenue: 3.84
• Enterprise Value/Gross Profit: 6.25
• Enterprise Value/Ebitda: 12.77
• 1Y Price Target: $19.03
• Price Target Upside: 11.19% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 60 Neutral
• Price Target: C$18.00 ▲(5.20% Upside)

TransAlta's stock score is primarily influenced by its strong technical indicators and positive developments from the recent earnings call, which highlight strategic advancements and robust financial performance. However, the company's financial performance is hindered by declining revenues and high leverage, and its valuation is unattractive due to negative earnings. These factors collectively moderate the overall score.

Positive Factors

Power Prices

Rising forward power prices in Alberta are too significant to ignore, benefiting TransAlta due to its extensive merchant exposure.

Project Development

Centralia coal-to-gas conversion and future site expansion discussions are advancing, with potential positive impact on shares.

Valuation

TransAlta's free cash flow yield is highly attractive compared to its peers, trading at over 14%.

Negative Factors

AI Customer Attraction

The hype of attracting blue chip AI customers has waned due to the impracticality of U.S.-based top-tier AI customers moving across borders during heightened trade tension.

Investor Confidence

Shares have retreated 39% YTD, indicating a reduction in investor confidence due to the impracticality of attracting top-tier AI customers.

Renewable Energy

The renewable development pipeline is mostly on hold, and no associated value is ascribed to it in the current model.

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 generates revenue primarily through the sale of electricity produced from its power generation facilities. The company operates a mix of regulated and unregulated power plants, allowing it to earn revenue from both long-term power purchase agreements (PPAs) and spot market sales. Key revenue streams include: 1) Sale of electricity: TransAlta sells the electricity generated from its facilities to utilities, large industrial customers, and on the wholesale market. 2) Ancillary services: The company provides services that help maintain grid stability, such as frequency regulation and spinning reserves, which are compensated by grid operators. 3) Renewable energy credits (RECs) and carbon credits: As part of its commitment to sustainability, TransAlta also benefits from the sale of RECs and carbon credits. 4) Strategic partnerships: Collaborations with other energy providers and participation in joint ventures can enhance operational efficiency and expand market reach. Factors contributing to earnings include regulatory frameworks, market demand for clean energy, and the company’s efforts to transition its portfolio towards renewable energy sources.

TransAlta Financial Statement Overview

Summary

TransAlta exhibits a mixed financial performance with robust cash flow generation and operational efficiency, but faces challenges with declining revenues and profitability. High leverage poses potential risks, although the equity ratio remains stable.

Income Statement

TransAlta's income statement shows a mixed performance. The Gross Profit Margin for the TTM (Trailing-Twelve-Months) is 56.43%, indicating a healthy ability to cover operating expenses. However, the Net Profit Margin has decreased significantly to 2.00% in TTM, reflecting reduced profitability. Revenue has declined from $2.845 billion in 2024 to $2.656 billion in TTM, a decrease of 6.66%, which is concerning for growth. The EBIT Margin and EBITDA Margin are 12.73% and 35.31% respectively, showing stable operating efficiency despite lower revenues.

Balance Sheet

The balance sheet reflects a stable but leveraged financial position. The Debt-to-Equity Ratio stands at 2.67 in TTM, indicating high leverage and potential risk if revenues decline. Return on Equity is low at 3.06% for TTM, down from 13.12% in 2024, suggesting reduced shareholder returns. However, the Equity Ratio is stable at 18.26%, signifying a moderate level of equity financing in the asset structure.

Cash Flow

TransAlta's cash flow performance is robust with a strong Operating Cash Flow to Net Income Ratio of 10.55 in TTM, indicating efficient cash generation from operations. The Free Cash Flow to Net Income Ratio is 5.21, showing good conversion of profits into free cash flow. However, Free Cash Flow has decreased by 41.89% compared to 2024, which impacts future investment capabilities.

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	1.54B	1.79B	1.64B	1.64B	1.49B	1.13B
EBITDA	754.00M	1.10B	1.71B	1.23B	591.00M	738.00M
Net Income	-115.00M	229.00M	695.00M	161.00M	-425.00M	-253.00M
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	3.67B	3.27B	3.36B
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	-616.00M	-520.00M	-814.00M	-741.00M	-472.00M	-687.00M
Financing Cash Flow	-121.00M	-291.00M	-1.43B	45.00M	-282.00M	272.00M

TransAlta Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 17.11
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 17.11 is above the 20-day moving average (MA) of 16.87, above the 50-day MA of 15.97, and above the 200-day MA of 15.30, indicating a bullish trend. The MACD of 0.34 indicates Positive momentum. The RSI at 59.54 is Neutral, neither overbought nor oversold. The STOCH value of 65.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TA.

TransAlta Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INE	72 Outperform		―		―	0.97%	―
CPX	68 Neutral	C$9.35B	18.82	10.00%	4.38%	-16.83%	-37.24%
Sector *	67 Neutral	$17.75B	18.23	5.29%	3.57%	7.33%	12.21%
TA	60 Neutral	$5.08B	21.52	-6.83%	1.44%	-20.91%	-127.48%
BLX	54 Neutral	C$3.12B	271.12	-0.61%	2.22%	-13.45%	-112.19%
AQN	―	$4.44B	―	1.50%	4.47%	―	―
NPIFF	―	$4.21B	22.35	-1.19%	5.37%	―	―

TransAlta Corporate Events

TransAlta Declares Quarterly Dividends for 2025

TransAlta Corporation has announced the declaration of quarterly dividends for its common and preferred shares, highlighting its commitment to shareholder returns. The dividends, expressed in Canadian dollars, will be payable on October 1, 2025, for common shares and September 30, 2025, for preferred shares, with varying rates for different series. This announcement underscores TransAlta’s stable financial performance and its strategic focus on maintaining investor confidence through consistent dividend payouts.

The most recent analyst rating on (TSE:TA) stock is a Buy 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.