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

Adequate balance sheet and fair value.


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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

7.3%

TA

3.5%

CA Renewable Energy

1.5%

CA Market


1 Year Return

42.4%

TA

30.7%

CA Renewable Energy

9.8%

CA Market

Return vs Industry: TA exceeded the Canadian Renewable Energy industry which returned 29.1% over the past year.

Return vs Market: TA exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

TAIndustryMarket
7 Day7.3%3.5%1.5%
30 Day1.4%3.7%2.4%
90 Day16.8%13.3%6.2%
1 Year45.0%42.4%36.9%30.7%13.4%9.8%
3 Year27.8%20.0%43.0%23.8%17.7%7.0%
5 Year0.9%-15.5%73.5%34.5%36.5%16.4%

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$8.72) is trading below our estimate of fair value (CA$62.11)

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


Price To Earnings Ratio

PE vs Industry: TA is unprofitable, so we can't compare its PE Ratio to the Renewable Energy industry average.

PE vs Market: TA is unprofitable, so we can't compare its PE Ratio to the Canadian market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate TA's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: TA is good value based on its PB Ratio (1.3x) compared to the CA Renewable Energy industry average (1.8x).


Next Steps

Future Growth

How is TransAlta forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

27.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TA is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: TA is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: TA is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: TA's revenue is expected to decline over the next 3 years (-4.1% per year).

High Growth Revenue: TA's revenue is forecast to decline over the next 3 years (-4.1% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if TA's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has TransAlta performed over the past 5 years?

-57.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TA is currently unprofitable.

Growing Profit Margin: TA is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: TA is unprofitable, and losses have increased over the past 5 years at a rate of -57% per year.

Accelerating Growth: Unable to compare TA's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: TA is unprofitable, making it difficult to compare its past year earnings growth to the Renewable Energy industry (-28.4%).


Return on Equity

High ROE: TA has a negative Return on Equity (0.35%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is TransAlta's financial position?


Financial Position Analysis

Short Term Liabilities: TA's short term assets (CA$1.5B) exceed its short term liabilities (CA$735.0M).

Long Term Liabilities: TA's short term assets (CA$1.5B) do not cover its long term liabilities (CA$4.5B).


Debt to Equity History and Analysis

Debt Level: TA's debt to equity ratio (81.1%) is considered high.

Reducing Debt: TA's debt to equity ratio has reduced from 112.2% to 81.1% over the past 5 years.


Balance Sheet

Inventory Level: TA has a high level of physical assets or inventory.

Debt Coverage by Assets: TA's debt is not covered by short term assets (assets are 0.5x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable TA has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: TA is unprofitable but has sufficient cash runway for more than 3 years, even with free cash flow being positive and shrinking by -3.3% per year.


Next Steps

Dividend

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

1.83%

Current Dividend Yield


Upcoming Dividend Payment

Purchase TransAlta before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.8%marketbottom25%1.9%markettop25%5.4%industryaverage4.2%forecastin3Years1.8%

Current dividend yield vs market & industry

Notable Dividend: TA's dividend (1.83%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: TA's dividend (1.83%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


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: TA is paying a dividend but the company is unprofitable.


Future Payout to Shareholders

Future Dividend Coverage: TA's dividends in 3 years are not forecast to be well covered by earnings (385.7% payout ratio).


Next Steps

Management

What is the CEO of TransAlta's salary, the management and board of directors tenure and is there insider trading?

2.3yrs

Average management tenure


CEO

Dawn Farrell (59yo)

8yrs

Tenure

CA$6,175,614

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 ($USD4.73M) is above average for companies of similar size in the Canadian market ($USD2.17M).

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


Management Age and Tenure

2.3yrs

Average Tenure

55yo

Average Age

Experienced Management: TA's management team is considered experienced (2.3 years average tenure).


Board Age and Tenure

5.5yrs

Average Tenure

66yo

Average Age

Experienced Board: TA's board of directors are considered experienced (5.5 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyCA$19306 Jan 20
Aron Willis
EntityIndividual
Shares21
Max PriceCA$9.20
BuyCA$54,30217 Dec 19
Gordon Giffin
EntityIndividual
Role
Chairman of the Board
Independent Chairman of the Board
Shares6,130
Max PriceCA$8.86
BuyCA$1,67122 Nov 19
Scott Jeffers
EntityIndividual
Shares189
Max PriceCA$8.84
BuyCA$19204 Oct 19
Aron Willis
EntityIndividual
Shares22
Max PriceCA$8.74
BuyCA$74,73624 Sep 19
John Kousinioris
EntityIndividual
Role
Chief Operating Officer
COO & Chief Growth Officer
Shares22,228
Max PriceCA$8.60
SellCA$49,39024 Sep 19
John Kousinioris
EntityIndividual
Role
Chief Operating Officer
COO & Chief Growth Officer
Shares5,780
Max PriceCA$8.55
BuyCA$19004 Jul 19
Aron Willis
EntityIndividual
Shares24
Max PriceCA$7.91
BuyCA$25,70412 Jun 19
Todd Stack
EntityIndividual
Role
Chief Financial Officer
Chief Financial Officer
Shares3,000
Max PriceCA$8.57
BuyCA$85,10011 Jun 19
Bryan Pinney
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceCA$8.51
BuyCA$19005 Apr 19
Aron Willis
EntityIndividual
Shares19
Max PriceCA$9.99
BuyCA$501,25829 Mar 19
Dawn Farrell
EntityIndividual
Role
Chief Executive Officer
President
Shares50,000
Max PriceCA$10.03
BuyCA$2,378,07527 Mar 19
Cove Key Management LP
EntityCompany
Shares194,900
Max PriceCA$12.23
SellCA$53,526,00015 Mar 19
Mangrove Partners
EntityCompany
Shares6,591,154
Max PriceCA$8.12
BuyCA$53,526,00015 Mar 19
Cove Key Management LP
EntityCompany
Shares6,591,154
Max PriceCA$8.12
BuyCA$50,05806 Mar 19
Ronalee Ambrose
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares6,053
Max PriceCA$8.27

Ownership Breakdown

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


Management Team

  • Dawn Farrell (59yo)

    President

    • Tenure: 8yrs
    • Compensation: CA$6.18m
  • John Kousinioris (54yo)

    COO & Chief Growth Officer

    • Tenure: 0.4yrs
    • Compensation: CA$2.22m
  • Wayne Collins

    Executive Vice-President of Generation

    • Tenure: 5.7yrs
    • Compensation: CA$1.79m
  • Dawn de Lima

    Chief Shared Services Officer

    • Tenure: 2yrs
    • Compensation: CA$1.94m
  • Brett Gellner (55yo)

    Chief Development Officer

    • Compensation: CA$2.87m
  • Todd Stack

    Chief Financial Officer

    • Tenure: 0.7yrs
  • Brent Ward

    MD & Treasurer

    • Tenure: 2.6yrs
  • Stacey Hatcher

    Manager of Communications

    • Tenure: 5.6yrs
  • Kerry Wilks

    Chief Officer of Legal

    • Tenure: 1yrs
  • Chiara Valentini

    Manager of Investor Relations


    Board Members

    • Bob Flexon (61yo)

      Independent Director

      • Tenure: 0.8yrs
    • Georgia Nelson (69yo)

      Independent Director

      • Tenure: 5.8yrs
      • Compensation: CA$249.76k
    • Al Fohrer (68yo)

      Independent Director

      • Tenure: 6.8yrs
      • Compensation: CA$226.96k
    • Gordon Giffin (70yo)

      Independent Chairman of the Board

      • Tenure: 8.8yrs
      • Compensation: CA$439.37k
    • John Dielwart (66yo)

      Independent Director

      • Tenure: 5.3yrs
      • Compensation: CA$170.43k
    • Bev Park (57yo)

      Independent Director

      • Tenure: 4.8yrs
      • Compensation: CA$183.38k
    • Dawn Farrell (59yo)

      President

      • Tenure: 8yrs
      • Compensation: CA$6.18m
    • Yakout Mansour (71yo)

      Independent Director

      • Tenure: 9yrs
      • Compensation: CA$217.07k
    • Bryan Pinney (66yo)

      Independent Director

      • Tenure: 1.8yrs
      • Compensation: CA$111.21k
    • Rona Ambrose (49yo)

      Independent Director

      • Tenure: 2.5yrs
      • Compensation: CA$160.00k

    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$2.606b
    • Shares outstanding: 279.95m
    • 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 Analysis2020/01/19 23:53
    End of Day Share Price2020/01/17 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    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.