TransAlta (TA) AI Stock Analysis

• Market Cap: $4.42B
• Dividend Yield: 2.39%
• Average Volume (3M): 1.65M
• Price to Earnings (P/E): 21.5
• Beta (1Y): 0.89
• Revenue Growth: -17.34%
• EPS Growth: -100.03%
• Country: CA
• Employees: 1,165
• Sector: Utilities
• Sector Strength: 75
• Industry: Independent Power Producers
• EPS (TTM): 0.15
• Shares Outstanding: 296,400,000
• 10 Day Avg. Volume: 2,051,253
• 30 Day Avg. Volume: 1,645,837
• PEG Ratio: -0.15
• Price to Book (P/B): 2.96
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -45.58
• 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: $17.90
• Price Target Upside: 22.57% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 67 Neutral
• Price Target: C$17.00 ▲(16.44%Upside)

TransAlta's overall stock score reflects a mixed performance, driven primarily by strong cash flow and operational efficiency. Technical indicators show positive momentum, but the valuation remains unattractive due to negative earnings. Earnings call highlights strategic growth, yet market challenges persist.

Positive Factors

Earnings

TransAlta has been upgraded to BUY due to more tangible evidence of durably higher AESO power prices following large load integration.

Financial Performance

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

Operations

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

Negative Factors

Growth Potential

The data center allocation for TransAlta is expected to be quite limited, which could mute its impact on the company's overall growth.

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

Renewable development efforts are on hold, with most focus shifting to thermal opportunities, impacting the potential growth in renewable energy projects.

TransAlta Business Overview & Revenue Model

Company Description

TransAlta Corporation is a leading Canadian power generation and energy trading company headquartered in Calgary, Alberta. It operates a diversified portfolio of energy assets, including coal, natural gas, wind, hydroelectric, and solar power facilities. TransAlta focuses on providing reliable, sustainable, and affordable energy solutions across Canada, the United States, and Australia, while also engaging in energy trading and marketing operations.

How the Company Makes Money

TransAlta makes money primarily through the generation and sale of electricity. The company operates a diverse mix of energy facilities that produce power from various sources such as coal, natural gas, wind, hydroelectric, and solar. Revenue is generated by selling this electricity to wholesale markets, utilities, industrial customers, and government entities. Additionally, TransAlta engages in energy trading and marketing, where it buys and sells electricity and other energy commodities to optimize its portfolio and manage risk. The company also enters into long-term contracts with customers, which provide stable and predictable cash flows. Significant partnerships, such as joint ventures or collaborations with other energy companies, can further enhance revenue streams and operational efficiencies.

TransAlta Financial Statement Overview

Summary

TransAlta shows strengths in cash flow generation with a strong operating cash flow to net income ratio and stable operational efficiency. However, it faces challenges with declining revenues, profitability, and high leverage, which presents potential risks.

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	2.31B	2.85B	3.35B	2.98B	2.72B	2.10B
Gross Profit	1.35B	1.79B	1.64B	1.64B	1.49B	1.13B
EBITDA	1.16B	1.10B	1.71B	1.23B	591.00M	738.00M
Net Income	164.00M	229.00M	695.00M	161.00M	-425.00M	-253.00M
Balance Sheet
Total Assets	9.50B	9.50B	8.66B	10.74B	9.23B	9.75B
Cash, Cash Equivalents and Short-Term Investments	337.00M	337.00M	348.00M	1.13B	947.00M	703.00M
Total Debt	4.56B	4.56B	4.21B	3.67B	3.27B	3.36B
Total Liabilities	7.66B	7.66B	7.00B	8.75B	6.63B	6.31B
Stockholders Equity	1.75B	1.75B	1.54B	1.11B	1.58B	2.35B
Cash Flow
Free Cash Flow	513.00M	475.00M	576.00M	-72.00M	512.00M	202.00M
Operating Cash Flow	981.00M	796.00M	1.46B	877.00M	1.00B	702.00M
Investing Cash Flow	-554.00M	-520.00M	-814.00M	-741.00M	-472.00M	-687.00M
Financing Cash Flow	-201.00M	-291.00M	-1.43B	45.00M	-282.00M	272.00M

TransAlta Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 14.60
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• 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 Positive. The current price of 14.6 is below the 20-day moving average (MA) of 14.67, above the 50-day MA of 13.29, and below the 200-day MA of 14.81, indicating a neutral trend. The MACD of 0.51 indicates Positive momentum. The RSI at 54.17 is Neutral, neither overbought nor oversold. The STOCH value of 19.10 is Positive, 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
CPX	75 Outperform	C$8.83B	12.32	15.24%	4.58%	-27.55%	-12.05%
NPI	72 Outperform	C$5.65B	21.70	6.08%	5.55%	-5.33%	―
TA	67 Neutral	$4.42B	21.52	2.97%	2.39%	-17.34%	-100.03%
INE	67 Neutral	C$2.80B	70.21	4.20%	2.61%	0.97%	―
Sector *	61 Neutral	€5.78B	-4.12	6.63%	4.29%	-1.39%	182.39%
BLX	58 Neutral	C$3.25B	294.95	0.67%	2.87%	-16.63%	-87.78%
AQN	56 Neutral	C$5.97B	―	5.54%	4.81%	-4.74%	-213.24%

TransAlta Corporate Events

TransAlta Declares Quarterly Dividends on Preferred Shares

TransAlta Corporation has announced the declaration of quarterly dividends on its Cumulative Redeemable Rate Reset First Preferred Shares for the period from March 31, 2025, to June 30, 2025. This announcement reflects the company’s commitment to delivering shareholder value through consistent dividend payouts, which may impact investor confidence and the company’s financial positioning in the energy sector.

TransAlta to Host Shareholder Meeting and Q1 2025 Results Call

TransAlta Corporation announced it will host its annual meeting of shareholders on April 24, 2025, in a virtual format. Additionally, the company will release its first quarter 2025 financial results on May 7, 2025, followed by a conference call to discuss the outcomes. These events are significant for stakeholders as they provide insights into TransAlta’s operational performance and strategic direction, reinforcing its commitment to transparency and engagement with investors and analysts.