Fact based stock research
TransAlta (TSX:TA)

CA89346D1078

How to read the free ranks

For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

TransAlta stock research in summary

transalta.com

ANALYSIS: With an Obermatt Combined Rank of 1 (worse than 99% compared with investment alternatives), TransAlta (Power Producers & Traders, Canada) shares have lower financial characteristics compared with similar stocks. Shares of TransAlta are low in value (priced high) with a consolidated Value Rank of 21 (worse than 79% of alternatives), show below-average growth (Growth Rank of 23), and are riskily financed (Safety Rank of 31), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 1, is a sell recommendation based on TransAlta's financial characteristics. As the company TransAlta's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 21), low growth (Obermatt Growth Rank of 23), and risky financing practices (Obermatt Safety Rank of 31), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	21
Growth Rank	23
Safety Rank	31
Combined Rank	1

Country	Canada
Industry	Power Producers & Traders
Index	Low Emissions, TSX Composite
Size class	Large

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

Why popular stocks have low ratings

It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.

Review the performance ranks of the individual metrics that form each investment strategy.

Research History: TransAlta

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	13	19	26	21
GROWTH
GROWTH	71	17	17	23
SAFETY
SAFETY	16	51	61	31
SENTIMENT
SENTIMENT	n/a	61	94	^new
360° VIEW
360° VIEW	n/a	19	52	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better TransAlta is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	13	19	26	21
GROWTH
GROWTH	71	17	17	23
SAFETY
SAFETY	16	51	61	31
COMBINED
COMBINED	25	13	16	1

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of TransAlta the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 21 (worse than 79% compared with alternatives), TransAlta shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, where the majority of metrics are below, and only one is above average for TransAlta. Price-to-Sales (P/S) is 78, which means that the stock price compared with what market professionals expect for future sales is lower than 78% of comparable companies, indicating a good value concerning to TransAlta's revenue size. But all other performance indicators point in a different direction. Dividend yields have a Dividend Yield rank of 9, meaning that dividends are expected to be lower than for 91% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 95% of alternatives (only 5% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than for 91% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 21, is a sell recommendation based on TransAlta's stock price compared with the company's operational size and dividend yields. Since Price-to-Sales is a stable value indicator even in challenging times, investing in TransAlta could be seen as a value investment. However, there must be a good reason for the low market-to-book rank. If the company has a typical capital investment practice, the stock may be overvalued because the profit and dividend-related performance indicators are also low. The stock is only good value if investors can expect profits and dividends to pick up in the future. Else, TransAlta looks like an expensive investment today. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	60	90	91	78
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	8	3	13	9
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	4	3	12	5
DIVIDEND YIELD
DIVIDEND YIELD	23	9	10	9
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	13	19	26	21

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of TransAlta; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 23 (better than 23% compared with alternatives), TransAlta shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for TransAlta. Capital Growth has a rank of 100, which means that currently professionals expect the company to grow its invested capital more than 8% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 51 (above 51% of alternative investments). But Sales Growth has only a rank of 6, which means that, currently, professionals expect the company to grow less than 94% of its competitors, and Profit Growth is also low at a rank of 8. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 23, is a sell recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for TransAlta, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	56	1	1	6
PROFIT GROWTH
PROFIT GROWTH	11	16	100	8
CAPITAL GROWTH
CAPITAL GROWTH	n/a	62	4	100
STOCK RETURNS
STOCK RETURNS	79	75	31	51
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	71	17	17	23

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of TransAlta.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 31 (better than 31% compared with alternatives), the company TransAlta has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of TransAlta is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for TransAlta. Liquidity is at 92, meaning the company generates more profit to service its debt than 92% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 13, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 87% of its competitors. Leverage is also high at a rank of 8, which means that the company has an above-average debt-to-equity ratio. It has more debt than 92% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 31 (worse than 69% compared with alternatives), TransAlta has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	36	60	12	8
REFINANCING
REFINANCING	17	93	100	13
LIQUIDITY
LIQUIDITY	21	3	42	92
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	16	51	61	31

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of TransAlta and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	84	75	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	64	69	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	7	66	^new
MARKET PULSE
MARKET PULSE	n/a	60	81	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	61	94	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for TransAlta.
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