TransAlta Corporation
TransAlta Corporation Fundamental Analysis
TransAlta Corporation (TA.TO) shows weak financial fundamentals with a PE ratio of -36.93, profit margin of -5.74%, and ROE of -8.84%. The company generates $2.4B in annual revenue with weak year-over-year growth of -15.43%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of -22.9/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze TA.TO's fundamental strength across five key dimensions:
Efficiency Score
WeakTA.TO struggles to generate sufficient returns from assets.
Valuation Score
ModerateTA.TO shows balanced valuation metrics.
Growth Score
WeakTA.TO faces weak or negative growth trends.
Financial Health Score
WeakTA.TO carries high financial risk with limited liquidity.
Profitability Score
WeakTA.TO struggles to sustain strong margins.
Key Financial Metrics
Is TA.TO Expensive or Cheap?
P/E Ratio
TA.TO trades at -36.93 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, TA.TO's PEG of 2.30 indicates potential overvaluation.
Price to Book
The market values TransAlta Corporation at 3.64 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 1.40 times EBITDA. This is generally considered low.
How Well Does TA.TO Make Money?
Net Profit Margin
For every $100 in sales, TransAlta Corporation keeps $-5.74 as profit after all expenses.
Operating Margin
Core operations generate 0.79 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-8.84 in profit for every $100 of shareholder equity.
ROA
TransAlta Corporation generates $-1.59 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
TransAlta Corporation generates strong operating cash flow of $652.56M, reflecting robust business health.
Free Cash Flow
TransAlta Corporation generates strong free cash flow of $396.73M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.34 in free cash annually.
FCF Yield
TA.TO converts 7.76% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
-36.93
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
2.30
vs 25 benchmark
P/B Ratio
Price to book value ratio
3.64
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.12
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
3.21
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.73
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.09
vs 25 benchmark
ROA
Return on assets percentage
-0.02
vs 25 benchmark
ROCE
Return on capital employed
0.003
vs 25 benchmark
How TA.TO Stacks Against Its Sector Peers
| Metric | TA.TO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | -36.93 | 20.39 | Better (Cheaper) |
| ROE | -8.84% | 911.00% | Weak |
| Net Margin | -5.74% | 735.00% | Weak |
| Debt/Equity | 3.21 | 1.46 | Weak (High Leverage) |
| Current Ratio | 0.73 | 1.30 | Weak Liquidity |
| ROA | -1.59% | 934.00% | Weak |
TA.TO outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews TransAlta Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
6.03%
Industry Style: Defensive, Dividend, Income
GrowingEPS CAGR
55.48%
Industry Style: Defensive, Dividend, Income
High GrowthFCF CAGR
-14.79%
Industry Style: Defensive, Dividend, Income
Declining