Transalta Corp (NYSE: TAC)

Sector: Utilities Industry: Utilities - Independent Power Producers CIK: 0001144800
Market Cap 3.50 Bn
P/B 3.15
P/E -28.96
P/S 1.95
ROIC (Qtr) 3.12
Div Yield % 1.49
Rev 1y % (Qtr) -5.00
Total Debt (Qtr) 2.66 Bn
Debt/Equity (Qtr) 2.39
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About

Investment thesis

Bull case

  • Tangible assets of 5.88B provide exceptional 312.35x coverage of deferred revenue 18.84M, showing strong service capability backing.
  • Operating cash flow of 456.52M provides strong 24.23x coverage of deferred revenue 18.84M, indicating service delivery capability.
  • Operating cash flow of 456.52M provides strong 4.53x coverage of inventory 100.72M, indicating efficient inventory management.
  • Tangible assets of 5.88B provide robust 7.78x coverage of other current liabilities 756.52M, indicating strong asset backing.
  • Cash position of 203.62M provides strong 10.81x coverage of deferred revenue 18.84M, ensuring service delivery capability.

Bear case

  • Operating cash flow of 456.52M barely covers its investment activities of (452.17M), with a coverage ratio of -1.01, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 456.52M provides thin coverage of dividend payments of (52.17M) with a -8.75 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 556.52M relative to inventory of 100.72M (5.53 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 165.22M show weak coverage of depreciation charges of 415.94M, with a 0.40 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 264.49M represents just -20.28x of debt issuance (13.04M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical areas [axis] Breakdown of Revenue (2024)

Revision of Prior Period Breakdown of Revenue (2024)

Peer comparison

Companies in the Utilities - Independent Power Producers
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VST Vistra Corp. 73.36 Bn -53.28 5.34 17.66 Bn
2 NRG Nrg Energy, Inc. 46.15 Bn 44.25 4.80 12.11 Bn
3 TLN Talen Energy Corp 17.14 Bn 75.84 7.45 2.99 Bn
4 KEN Kenon Holdings Ltd. 4.39 Bn 9.20 5.46 1.38 Bn
5 TAC Transalta Corp 3.50 Bn -28.96 1.95 2.66 Bn
6 DGXX Digi Power X Inc. 0.09 Bn -6.97 2.74 0.00 Bn
7 PAM Pampa Energy Inc. 0.00 Bn 0.00 0.00 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.66 1.83
EV to Cash from Ops. EV/CFO 9.27 49.01
EV to Debt EV to Debt 1.59 3.50
EV to EBIT EV/EBIT 25.62 5.95
EV to EBITDA EV/EBITDA 8.45 35.45
EV to Free Cash Flow [EV/FCF] EV/FCF 16.00 12.20
EV to Market Cap EV to Market Cap 1.21 1.12
EV to Revenue EV/Rev 2.35 5.24
Price to Book Value [P/B] P/B 3.15 0.88
Price to Earnings [P/E] P/E -28.96 6.68
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.98 0.64
Dividend Payout Ratio % Div Payout % (Qtr) -42.30 2.42
Dividend per Basic Share Div per Share (Qtr) 0.20 0.40
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 15.95 8.07
Interest Coverage Int. cover (Qtr) 0.64 69.73
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 39.27 -12.19
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -40.70 146.90
Dividend Growth (1y) % Div 1y % (Qtr) -2.49 -3.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -39.99 5.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -39.41 -128.84
EBIT Growth (1y) % EBIT 1y % (Qtr) -63.40 -6.04
EBT Growth (1y) % EBT 1y % (Qtr) -140.54 -8.31
EPS Growth (1y) % EPS 1y % (Qtr) -275.20 -17.95
FCF Growth (1y) % FCF 1y % (Qtr) -21.97 18.34
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -13.69 7.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.20 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.04
Cash Ratio Cash Ratio (Qtr) 0.15 1.07
Current Ratio Curr Ratio (Qtr) 0.79 2.39
Debt to Equity Ratio Debt/Equity (Qtr) 2.39 2.48
Interest Cover Ratio Int Coverage (Qtr) 0.64 69.73
Times Interest Earned Times Interest Earned (Qtr) 0.64 69.73
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.30 30.25
EBIT Margin % EBIT Margin % (Qtr) 12.67 15.08
EBT Margin % EBT Margin % (Qtr) -5.23 7.19
Gross Margin % Gross Margin % (Qtr) 60.70 26.28
Net Profit Margin % Net Margin % (Qtr) -6.70 5.55