TSX:TA

Stock Analysis Report

Executive Summary

TransAlta Corporation operates as non-regulated electricity generation and energy marketing company in Canada, the United States, and Western Australia.


Snowflake Analysis

Fair value with mediocre balance sheet.


Similar Companies

Share Price & News

How has TransAlta's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: TA's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.6%

TA

-1.9%

CA Renewable Energy

1.1%

CA Market


1 Year Return

-23.9%

TA

0.2%

CA Renewable Energy

-22.9%

CA Market

Return vs Industry: TA underperformed the Canadian Renewable Energy industry which returned 2.4% over the past year.

Return vs Market: TA underperformed the Canadian Market which returned -24.6% over the past year.


Shareholder returns

TAIndustryMarket
7 Day1.6%-1.9%1.1%
30 Day-25.3%-20.5%-17.3%
90 Day-15.7%-8.8%-23.4%
1 Year-22.5%-23.9%4.9%0.2%-20.4%-22.9%
3 Year3.5%-2.6%17.2%1.5%-12.7%-20.8%
5 Year-26.3%-37.6%49.3%16.6%0.1%-14.9%

Price Volatility Vs. Market

How volatile is TransAlta's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is TransAlta undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: TA (CA$7.08) is trading below our estimate of fair value (CA$44.26)

Significantly Below Fair Value: TA is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: TA is poor value based on its PE Ratio (38.5x) compared to the Renewable Energy industry average (27.2x).

PE vs Market: TA is poor value based on its PE Ratio (38.5x) compared to the Canadian market (10.4x).


Price to Earnings Growth Ratio

PEG Ratio: TA is poor value based on its PEG Ratio (2.7x)


Price to Book Ratio

PB vs Industry: TA is good value based on its PB Ratio (1x) compared to the CA Renewable Energy industry average (1.7x).


Next Steps

Future Growth

How is TransAlta forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

14.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TA's forecast earnings growth (14.4% per year) is above the savings rate (1.4%).

Earnings vs Market: TA's earnings (14.4% per year) are forecast to grow faster than the Canadian market (7% per year).

High Growth Earnings: TA's earnings are forecast to grow, but not significantly.

Revenue vs Market: TA's revenue is expected to decline over the next 3 years (-3.1% per year).

High Growth Revenue: TA's revenue is forecast to decline over the next 3 years (-3.1% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TA's Return on Equity is forecast to be low in 3 years time (2.9%).


Next Steps

Past Performance

How has TransAlta performed over the past 5 years?

-54.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TA has a large one-off gain of CA$176.0M impacting its December 31 2019 financial results.

Growing Profit Margin: TA became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: TA has become profitable over the past 5 years, growing earnings by -54.4% per year.

Accelerating Growth: TA has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: TA has become profitable in the last year, making it difficult to compare its past year earnings growth to the Renewable Energy industry (-15.6%).


Return on Equity

High ROE: TA's Return on Equity (4.3%) is considered low.


Next Steps

Financial Health

How is TransAlta's financial position?


Financial Position Analysis

Short Term Liabilities: TA's short term assets (CA$1.3B) exceed its short term liabilities (CA$1.1B).

Long Term Liabilities: TA's short term assets (CA$1.3B) do not cover its long term liabilities (CA$4.3B).


Debt to Equity History and Analysis

Debt Level: TA's debt to equity ratio (83.6%) is considered high.

Reducing Debt: TA's debt to equity ratio has reduced from 102.7% to 83.6% over the past 5 years.

Debt Coverage: TA's debt is well covered by operating cash flow (25%).

Interest Coverage: TA's interest payments on its debt are not well covered by EBIT (1.3x coverage).


Balance Sheet


Next Steps

Dividend

What is TransAlta's current dividend yield, its reliability and sustainability?

2.27%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: TA's dividend (2.4%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2.7%).

High Dividend: TA's dividend (2.4%) is low compared to the top 25% of dividend payers in the Canadian market (8.68%).


Stability and Growth of Payments

Stable Dividend: TA's dividend payments have been volatile in the past 10 years.

Growing Dividend: TA's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (87.1%), TA's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: TA's dividends in 3 years are forecast to be covered by earnings (73.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.8yrs

Average management tenure


CEO

Dawn Farrell (59yo)

8.25s

Tenure

CA$6,760,014

Compensation

Ms. Dawn Lorraine Farrell has been the Chief Executive Officer and President at TransAlta Corporation since January 2, 2012. Ms. Farrell served as the Chief Operating Officer of TransAlta Corporation from  ...


CEO Compensation Analysis

Compensation vs Market: Dawn's total compensation ($USD4.78M) is above average for companies of similar size in the Canadian market ($USD2.52M).

Compensation vs Earnings: Dawn's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Dawn Farrell
President8.25yrsCA$6.76m0.16% CA$3.3m
Todd Stack
Chief Financial Officer0.92yrCA$1.56m0.0099% CA$204.0k
John Kousinioris
Chief Operating Officer0.75yrCA$2.77m0.052% CA$1.1m
Dawn de Lima
Chief Shared Services Officer2.25yrsCA$1.94m0.031% CA$631.8k
Brett Gellner
Chief Development Officerno dataCA$2.63m0.061% CA$1.3m
Chiara Valentini
Manager of Investor Relationsno datano datano data
Kerry Wilks
Chief Officer of Legal1.25yrsno datano data
Stacey Hatcher
Manager of Communications5.83yrsno datano data
Wayne Collins
Executive Vice-President of Generation5.92yrsCA$1.79m0.024% CA$486.8k
Aron Willis
Senior Vice-President of Growth3.25yrsno data0.015% CA$304.3k

2.8yrs

Average Tenure

54.5yo

Average Age

Experienced Management: TA's management team is considered experienced (2.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Dawn Farrell
President8.25yrsCA$6.76m0.16% CA$3.3m
Robert Flexon
Independent Director1yrCA$163.00kno data
Georgia Nelson
Independent Director6yrsCA$267.40k0.0018% CA$37.3k
Alan Fohrer
Independent Director7yrsCA$278.23k0.0023% CA$47.9k
Gordon Giffin
Independent Chairman of the Board9yrsCA$533.82k0.069% CA$1.4m
John Dielwart
Independent Chair of the Board5.5yrsCA$182.50k0.0011% CA$23.7k
Beverlee Park
Independent Director5yrsCA$246.50k0.0068% CA$140.1k
Yakout Mansour
Independent Director9.25yrsCA$232.23k0.0022% CA$44.4k
Bryan Pinney
Independent Director2yrsCA$169.00k0.0038% CA$77.6k
Ronalee Ambrose
Independent Director2.75yrsCA$166.00k0.0032% CA$66.6k

5.8yrs

Average Tenure

66yo

Average Age

Experienced Board: TA's board of directors are considered experienced (5.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: TA insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

TransAlta Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: TransAlta Corporation
  • Ticker: TA
  • Exchange: TSX
  • Founded: 1909
  • Industry: Independent Power Producers and Energy Traders
  • Sector: Utilities
  • Market Cap: CA$2.063b
  • Shares outstanding: 275.78m
  • Website: https://www.transalta.com

Number of Employees


Location

  • TransAlta Corporation
  • 110-12th Avenue SW
  • PO Box 1900
  • Calgary
  • Alberta
  • T2P 2M1
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
TACNYSE (New York Stock Exchange)YesCommon SharesUSUSDJan 1988
TATSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 1988
TZ1DB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1988
TA.PRDTSX (The Toronto Stock Exchange)CUML RED PFD-ACACADDec 2010
TNSS.FOTCPK (Pink Sheets LLC)CUML RED PFD-AUSCADDec 2010
TA.PRJTSX (The Toronto Stock Exchange)1ST PFD SER G %CACADAug 2014

Biography

TransAlta Corporation operates as non-regulated electricity generation and energy marketing company in Canada, the United States, and Western Australia. It operates through eight segments: Canadian Coal, U.S. Coal, Canadian Gas, Australian Gas, Wind and Solar, Hydro, Energy Marketing, and Corporate. The company generates and markets electricity through various generation fuels, such as coal, natural gas, water, solar, and wind. It also engages in wholesale trading of electricity and other energy-related commodities and derivatives. The company operates facilities with approximately 9,331 megawatts of aggregate generating capacity. TransAlta Corporation was founded in 1909 and is headquartered in Calgary, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/07 01:55
End of Day Share Price2020/04/06 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.