TransAlta (TA) AI Stock Analysis

• Market Cap: C$4.99B
• Dividend Yield: 1.46%
• Average Volume (3M): 1.04M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.93
• Revenue Growth: -11.00%
• EPS Growth: -227.07%
• Country: CA
• Employees: 1,165
• Sector: Utilities
• Sector Strength: 65
• Industry: Independent Power Producers
• EPS (TTM): -0.02
• Shares Outstanding: 296,700,000
• 10 Day Avg. Volume: 909,132
• 30 Day Avg. Volume: 1,041,543
• 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: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$23.68
• Price Target Upside: 40.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 49 Neutral
• Price Target: C$17.00 ▲(1.13% 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

Diversified generation mix

A broad mix of hydro, wind, gas and coal provides structural resilience to commodity and weather cycles. Diversification enables optimization between contracted and merchant markets, supports grid services, and reduces single-resource exposure during the company’s energy transition.

Improving free cash flow generation

Sustained free cash flow growth strengthens the company’s ability to fund capital projects, service debt, and invest in renewables or data‑center pivots without sole reliance on external financing. Durable FCF supports deleveraging and operational stability over the medium term.

Progress on data‑center strategy and contracted capacity

Securing AESO allocation and advancing commercial talks opens a recurring, contracted revenue pathway distinct from volatile merchant power. Rezoning and land allocations underpin multi‑stage development potential, diversifying earnings toward stable, long‑duration customer contracts.

Negative Factors

High financial leverage

A D/E near 3x constrains financial flexibility and raises interest and refinancing risk, especially during investment-intensive transitions. Elevated leverage limits capacity for large capital projects, increases vulnerability to commodity downturns, and prolongs recovery if margins remain weak.

Declining revenue trend

Persistent revenue declines erode operating leverage and impede margin recovery. Over months, lower top-line trends reduce cash available for debt reduction and reinvestment, forcing reliance on asset sales or restructuring to restore sustainable earnings growth.

Alberta market headwinds pressure earnings

Prolonged subdued Alberta prices reduce merchant revenues and have driven adjusted EBITDA declines. Structural increases in regional generation and benign weather can keep prices depressed, constraining long‑term profitability for merchant‑exposed assets despite hedging.

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 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 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 16.81
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

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 16.81 is below the 20-day moving average (MA) of 17.45, below the 50-day MA of 19.30, and below the 200-day MA of 16.87, indicating a bearish trend. The MACD of -0.67 indicates Negative momentum. The RSI at 32.24 is Neutral, neither overbought nor oversold. The STOCH value of 12.03 is Positive, 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
CU	72 Outperform	C$11.84B	22.15	8.84%	4.33%	-0.94%	25.64%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
ACO.X	65 Neutral	C$5.78B	14.93	9.32%	3.62%	7.75%	11.25%
CPX	64 Neutral	C$9.41B	21.43	9.40%	4.44%	-2.99%	-32.11%
AQN	54 Neutral	C$6.82B	-162.34	2.04%	4.32%	-4.72%	96.98%
NPI	53 Neutral	$4.86B	-17.08	-7.06%	6.80%	-4.86%	-86.64%
TA	49 Neutral	C$4.99B	-25.88	-8.42%	1.46%	-11.00%	-227.07%

TransAlta Corporate Events

TransAlta to Temporarily Mothball Sheerness Unit 1 to Preserve Market Flexibility

TransAlta’s subsidiary Alberta Power (2000) Ltd. has notified the Alberta Electric System Operator that it will temporarily mothball Sheerness Unit 1, an Alberta thermal power unit, effective April 1, 2026, for up to two years, while keeping the unit available through the winter and leaving Sheerness Unit 2 fully operational. Management framed the move as a prudent financial step to preserve the long-term optionality of the asset, indicating the unit could be returned to service when market conditions or contracting opportunities improve, underscoring the company’s strategy to optimize its thermal portfolio while advancing its data centre plans and maintaining flexibility in Alberta’s evolving power market.

The most recent analyst rating on (TSE:TA) stock is a Hold with a C$19.50 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.

TransAlta Ordered to Keep Centralia Unit 2 Operational for Energy Reliability

TransAlta Corporation has announced that its subsidiary, TransAlta Centralia Generation LLC, received an order from the U.S. Department of Energy mandating that Centralia Unit 2 in Washington State remain operational for 90 days until March 16, 2026. The decision underscores the unit’s strategic importance in meeting immediate power generation needs. TransAlta is reviewing the order while working collaboratively with federal and state authorities, potentially influencing its operational strategy and reinforcing its role in energy reliability during critical periods.

The most recent analyst rating on (TSE:TA) stock is a Hold with a C$19.50 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.

TransAlta Declares Quarterly Dividends, Reinforcing Shareholder Value

TransAlta Corporation has announced the declaration of quarterly dividends for its common and preferred shares, with payments scheduled for April 1, 2026. This move underscores TransAlta’s commitment to delivering shareholder value and reflects its strong financial position. The announcement may positively impact investor confidence and highlights the company’s ongoing efforts to maintain stable returns for its stakeholders.

The most recent analyst rating on (TSE:TA) stock is a Hold with a C$19.50 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.

TransAlta’s Centralia Facility to Undergo Coal-to-Gas Conversion

TransAlta has signed a long-term agreement with Puget Sound Energy to convert its Centralia Unit 2 facility in Washington from coal to natural gas, ensuring a 700 MW capacity. This conversion will extend the facility’s life, reduce emissions by 50%, and align with clean energy laws, while generating long-term contracted cash flow for TransAlta. The project, requiring approximately $600 million in capital expenditures, is expected to commence operations by late 2028 and continue until 2044, pending regulatory approvals.

The most recent analyst rating on (TSE:TA) stock is a Hold with a C$19.50 price target. To see the full list of analyst forecasts on TransAlta stock, see the TSE:TA Stock Forecast page.