The Bull Case For TransAlta (TSX:TA) Could Change Following Sharp Decline in Q2 2025 Earnings Results

• TransAlta Corporation recently announced its second quarter 2025 results, reporting sales of C$433 million and a net loss of C$99 million, compared to C$582 million in sales and net income of C$69 million a year earlier.
• This performance underscores operational challenges, as the company shifted from profitability to a net loss over both the quarter and first half of 2025.
• We'll now look at how the sharp year-over-year sales and profit decline affects the outlook for TransAlta's earnings and renewable growth narrative.

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TransAlta Investment Narrative Recap

For TransAlta shareholders, the core investment case has centered on the company’s ability to benefit from rising power demand, particularly from data centers and renewables, while navigating the aging legacy fleet. The recent earnings miss and swing to a net loss raises short-term uncertainty around earnings stability, but it does not materially change the company’s most important near-term catalyst, securing new data center contracts, or its biggest risk, which remains exposure to power price compression and decarbonization cost pressures.

Of the recent company announcements, the ongoing share buyback program stands out. While TransAlta repurchased over 1.6 million shares for C$20 million in the latest tranche, this move is unlikely to offset operational pressures seen in earnings. Investors will watch closely to see if capital return programs like buybacks are reprioritized as TransAlta manages through margin pressures and market risks, aware that...

Read the full narrative on TransAlta (it's free!)

TransAlta's outlook projects CA$2.0 billion in revenue and CA$73.4 million in earnings by 2028. This reflects a 6.6% annual revenue decline and a CA$240.4 million increase in earnings from the current CA$-167.0 million.

Uncover how TransAlta's forecasts yield a CA$18.77 fair value, a 9% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members posted fair value estimates from C$18.77 up to C$60.39, reflecting two unique investor perspectives. Diverse views aside, persistent power price pressures could weigh heavily on revenue and earnings momentum, so consider how different market assumptions may alter your approach.

Explore 2 other fair value estimates on TransAlta - why the stock might be worth just CA$18.77!

Build Your Own TransAlta Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your TransAlta research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free TransAlta research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate TransAlta's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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