TransAlta Renewables Inc (RNW.CA) Fundamental Analysis & Valuation

TSX:RNW • CA8934631091

12.48 CAD
+0.14 (+1.13%)
Last: Oct 10, 2023, 07:00 PM
Overview Stock Chart Technical Analysis Fundamental Analysis Forecast Earnings Financials Ownership News

This RNW.CA fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.

Fundamental Rating

4

Taking everything into account, RNW scores 4 out of 10 in our fundamental rating. RNW was compared to 32 industry peers in the Independent Power and Renewable Electricity Producers industry. While RNW seems to be doing ok healthwise, there are quite some concerns on its profitability. RNW is valued correctly, but it does not seem to be growing.


Dividend Valuation Growth Profitability Health

3

1. RNW.CA Profitability Analysis

1.1 Basic Checks

  • RNW had positive earnings in the past year.
  • In the past year RNW had a positive cash flow from operations.
RNW.CA Yearly Net Income VS EBIT VS OCF VS FCFRNW.CA Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2016 2017 2018 2019 2020 2021 2022 0 100M 200M 300M

1.2 Ratios

  • RNW has a Return On Assets of 2.49%. This is comparable to the rest of the industry: RNW outperforms 56.41% of its industry peers.
  • Looking at the Return On Equity, with a value of 4.72%, RNW is in line with its industry, outperforming 53.85% of the companies in the same industry.
  • RNW's Return On Invested Capital of 2.68% is in line compared to the rest of the industry. RNW outperforms 53.85% of its industry peers.
  • Measured over the past 3 years, the Average Return On Invested Capital for RNW is in line with the industry average of 3.57%.
Industry RankSector Rank
ROA 2.49%
ROE 4.72%
ROIC 2.68%
ROA(3y)2.85%
ROA(5y)3.94%
ROE(3y)5.01%
ROE(5y)6.59%
ROIC(3y)3.02%
ROIC(5y)3.19%
RNW.CA Yearly ROA, ROE, ROICRNW.CA Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2016 2017 2018 2019 2020 2021 2022 0 2 4 6 8 10

1.3 Margins

  • RNW has a better Profit Margin (15.73%) than 87.18% of its industry peers.
  • RNW's Profit Margin has improved in the last couple of years.
  • RNW's Operating Margin of 17.94% is on the low side compared to the rest of the industry. RNW is outperformed by 64.10% of its industry peers.
  • In the last couple of years the Operating Margin of RNW has declined.
  • RNW's Gross Margin of 68.95% is in line compared to the rest of the industry. RNW outperforms 56.41% of its industry peers.
  • RNW's Gross Margin has declined in the last couple of years.
Industry RankSector Rank
OM 17.94%
PM (TTM) 15.73%
GM 68.95%
OM growth 3Y-10.6%
OM growth 5Y-8.51%
PM growth 3Y-30.95%
PM growth 5Y46.46%
GM growth 3Y-7.48%
GM growth 5Y-3.95%
RNW.CA Yearly Profit, Operating, Gross MarginsRNW.CA Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2016 2017 2018 2019 2020 2021 2022 0 20 40 60 80

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4

2. RNW.CA Health Analysis

2.1 Basic Checks

  • With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), RNW is destroying value.
  • Compared to 1 year ago, RNW has about the same amount of shares outstanding.
  • Compared to 1 year ago, RNW has an improved debt to assets ratio.
RNW.CA Yearly Shares OutstandingRNW.CA Yearly Shares OutstandingYearly Shares Outstanding 2016 2017 2018 2019 2020 2021 2022 50M 100M 150M 200M 250M
RNW.CA Yearly Total Debt VS Total AssetsRNW.CA Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2016 2017 2018 2019 2020 2021 2022 1B 2B 3B

2.2 Solvency

  • Based on the Altman-Z score of 1.07, we must say that RNW is in the distress zone and has some risk of bankruptcy.
  • The Altman-Z score of RNW (1.07) is better than 84.62% of its industry peers.
  • RNW has a debt to FCF ratio of 9.86. This is a negative value and a sign of low solvency as RNW would need 9.86 years to pay back of all of its debts.
  • RNW's Debt to FCF ratio of 9.86 is amongst the best of the industry. RNW outperforms 84.62% of its industry peers.
  • RNW has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
  • RNW's Debt to Equity ratio of 0.45 is amongst the best of the industry. RNW outperforms 94.87% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.45
Debt/FCF 9.86
Altman-Z 1.07
ROIC/WACC0.36
WACC7.52%
RNW.CA Yearly LT Debt VS Equity VS FCFRNW.CA Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2016 2017 2018 2019 2020 2021 2022 500M 1B 1.5B 2B

2.3 Liquidity

  • RNW has a Current Ratio of 0.87. This is a bad value and indicates that RNW is not financially healthy enough and could expect problems in meeting its short term obligations.
  • RNW has a Current ratio of 0.87. This is in the lower half of the industry: RNW underperforms 74.36% of its industry peers.
  • RNW has a Quick Ratio of 0.87. This is a bad value and indicates that RNW is not financially healthy enough and could expect problems in meeting its short term obligations.
  • RNW has a worse Quick ratio (0.83) than 71.79% of its industry peers.
Industry RankSector Rank
Current Ratio 0.87
Quick Ratio 0.83
RNW.CA Yearly Current Assets VS Current LiabilitesRNW.CA Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2016 2017 2018 2019 2020 2021 2022 200M 400M 600M

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WACCDebt/EquityHow to determine the health of a companyAltman-Z scoreShow peers with great health

3

3. RNW.CA Growth Analysis

3.1 Past

  • The earnings per share for RNW have decreased strongly by -30.07% in the last year.
  • Measured over the past years, RNW shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -13.31% on average per year.
  • RNW shows a decrease in Revenue. In the last year, the revenue decreased by -7.12%.
  • Measured over the past years, RNW shows a small growth in Revenue. The Revenue has been growing by 4.06% on average per year.
EPS 1Y (TTM)-30.07%
EPS 3Y-26.05%
EPS 5Y-13.31%
EPS Q2Q%2.04%
Revenue 1Y (TTM)-7.12%
Revenue growth 3Y7.88%
Revenue growth 5Y4.06%
Sales Q2Q%-28.78%

3.2 Future

  • RNW is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 20.90% yearly.
  • Based on estimates for the next years, RNW will show a decrease in Revenue. The Revenue will decrease by -1.49% on average per year.
EPS Next Y123%
EPS Next 2Y60.49%
EPS Next 3Y46.44%
EPS Next 5Y20.9%
Revenue Next Year-10.98%
Revenue Next 2Y-1.59%
Revenue Next 3Y-0.38%
Revenue Next 5Y-1.49%

3.3 Evolution

  • The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
  • When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
RNW.CA Yearly Revenue VS EstimatesRNW.CA Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 100M 200M 300M 400M 500M
RNW.CA Yearly EPS VS EstimatesRNW.CA Yearly EPS VS EstimatesYearly EPS VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0.2 0.4 0.6 0.8

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4

4. RNW.CA Valuation Analysis

4.1 Price/Earnings Ratio

  • With a Price/Earnings ratio of 41.60, RNW can be considered very expensive at the moment.
  • RNW's Price/Earnings ratio is in line with the industry average.
  • The average S&P500 Price/Earnings ratio is at 25.71. RNW is valued rather expensively when compared to this.
  • The Price/Forward Earnings ratio is 17.37, which indicates a rather expensive current valuation of RNW.
  • Based on the Price/Forward Earnings ratio, RNW is valued a bit cheaper than 74.36% of the companies in the same industry.
  • When comparing the Price/Forward Earnings ratio of RNW to the average of the S&P500 Index (23.82), we can say RNW is valued slightly cheaper.
Industry RankSector Rank
PE 41.6
Fwd PE 17.37
RNW.CA Price Earnings VS Forward Price EarningsRNW.CA Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60

4.2 Price Multiples

  • Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of RNW indicates a slightly more expensive valuation: RNW is more expensive than 74.36% of the companies listed in the same industry.
  • RNW's Price/Free Cash Flow is on the same level as the industry average.
Industry RankSector Rank
P/FCF 40.13
EV/EBITDA 18.28
RNW.CA Per share dataRNW.CA EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6

4.3 Compensation for Growth

  • The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
  • A more expensive valuation may be justified as RNW's earnings are expected to grow with 46.44% in the coming years.
PEG (NY)0.34
PEG (5Y)N/A
EPS Next 2Y60.49%
EPS Next 3Y46.44%

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Price/EarningsPrice/FCFFCF per shareEV/EBITDAPEG RATIOShow best valued peers

6

5. RNW.CA Dividend Analysis

5.1 Amount

  • RNW has a Yearly Dividend Yield of 7.53%, which is a nice return.
  • Compared to an average industry Dividend Yield of 3.45, RNW pays a better dividend. On top of this RNW pays more dividend than 87.18% of the companies listed in the same industry.
  • RNW's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
Industry RankSector Rank
Dividend Yield 7.53%

5.2 History

  • The dividend of RNW has a limited annual growth rate of 1.01%.
  • RNW has been paying a dividend for over 5 years, so it has already some track record.
  • RNW has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)1.01%
Div Incr Years0
Div Non Decr Years4
RNW.CA Yearly Dividends per shareRNW.CA Yearly Dividends per shareYearly Dividends per share 2017 2018 2019 2020 2021 2022 2023 0.2 0.4 0.6 0.8

5.3 Sustainability

  • 321.79% of the earnings are spent on dividend by RNW. This is not a sustainable payout ratio.
  • RNW's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP321.79%
EPS Next 2Y60.49%
EPS Next 3Y46.44%
RNW.CA Yearly Income VS Free CF VS DividendRNW.CA Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2016 2017 2018 2019 2020 2021 2022 0 100M 200M 300M
RNW.CA Dividend Payout.RNW.CA Dividend Payout, showing the Payout Ratio.RNW.CA Dividend Payout.PayoutRetained Earnings

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RNW.CA Fundamentals: All Metrics, Ratios and Statistics

TransAlta Renewables Inc

TSX:RNW (10/10/2023, 7:00:00 PM)

12.48

+0.14 (+1.13%)

Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryIndependent Power and Renewable Electricity Producers
Earnings (Last)N/A
Earnings (Next)N/A
Inst Owners12.12%
Inst Owner ChangeN/A
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap3.33B
Revenue(TTM)496.00M
Net Income(TTM)78.00M
Analysts50.77
Price Target13.25 (6.17%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield 7.53%
Yearly Dividend0.94
Dividend Growth(5Y)1.01%
DP321.79%
Div Incr Years0
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-40.17%
Min EPS beat(2)-67.61%
Max EPS beat(2)-12.73%
EPS beat(4)0
Avg EPS beat(4)-72.36%
Min EPS beat(4)-169.31%
Max EPS beat(4)-12.73%
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)0
Avg Revenue beat(2)-13.24%
Min Revenue beat(2)-17.17%
Max Revenue beat(2)-9.31%
Revenue beat(4)2
Avg Revenue beat(4)-0.59%
Min Revenue beat(4)-17.17%
Max Revenue beat(4)14.42%
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)-0.01%
PT rev (3m)-2.41%
EPS NQ rev (1m)0%
EPS NQ rev (3m)15.11%
EPS NY rev (1m)0%
EPS NY rev (3m)-13.03%
Revenue NQ rev (1m)99895.8%
Revenue NQ rev (3m)0.32%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-6.33%
Valuation
Industry RankSector Rank
PE 41.6
Fwd PE 17.37
P/S 6.72
P/FCF 40.13
P/OCF 14.23
P/B 2.02
P/tB 2.11
EV/EBITDA 18.28
EPS(TTM)0.3
EY2.4%
EPS(NY)0.72
Fwd EY5.76%
FCF(TTM)0.31
FCFY2.49%
OCF(TTM)0.88
OCFY7.03%
SpS1.86
BVpS6.19
TBVpS5.9
PEG (NY)0.34
PEG (5Y)N/A
Graham NumberN/A
Profitability
Industry RankSector Rank
ROA 2.49%
ROE 4.72%
ROCE 3.08%
ROIC 2.68%
ROICexc 2.73%
ROICexgc 2.8%
OM 17.94%
PM (TTM) 15.73%
GM 68.95%
FCFM 16.73%
ROA(3y)2.85%
ROA(5y)3.94%
ROE(3y)5.01%
ROE(5y)6.59%
ROIC(3y)3.02%
ROIC(5y)3.19%
ROICexc(3y)3.33%
ROICexc(5y)3.41%
ROICexgc(3y)3.43%
ROICexgc(5y)3.53%
ROCE(3y)3.59%
ROCE(5y)3.74%
ROICexgc growth 3Y3.02%
ROICexgc growth 5Y-2.2%
ROICexc growth 3Y3.17%
ROICexc growth 5Y-2.14%
OM growth 3Y-10.6%
OM growth 5Y-8.51%
PM growth 3Y-30.95%
PM growth 5Y46.46%
GM growth 3Y-7.48%
GM growth 5Y-3.95%
F-Score5
Asset Turnover0.16
Health
Industry RankSector Rank
Debt/Equity 0.45
Debt/FCF 9.86
Debt/EBITDA 3.34
Cap/Depr 111.85%
Cap/Sales 30.44%
Interest Coverage 2.41
Cash Conversion 104.46%
Profit Quality 106.41%
Current Ratio 0.87
Quick Ratio 0.83
Altman-Z 1.07
F-Score5
WACC7.52%
ROIC/WACC0.36
Cap/Depr(3y)52.56%
Cap/Depr(5y)46.42%
Cap/Sales(3y)14.83%
Cap/Sales(5y)13.02%
Profit Quality(3y)210.28%
Profit Quality(5y)186.98%
High Growth Momentum
Growth
EPS 1Y (TTM)-30.07%
EPS 3Y-26.05%
EPS 5Y-13.31%
EPS Q2Q%2.04%
EPS Next Y123%
EPS Next 2Y60.49%
EPS Next 3Y46.44%
EPS Next 5Y20.9%
Revenue 1Y (TTM)-7.12%
Revenue growth 3Y7.88%
Revenue growth 5Y4.06%
Sales Q2Q%-28.78%
Revenue Next Year-10.98%
Revenue Next 2Y-1.59%
Revenue Next 3Y-0.38%
Revenue Next 5Y-1.49%
EBIT growth 1Y-23.28%
EBIT growth 3Y-3.56%
EBIT growth 5Y-4.8%
EBIT Next Year272.09%
EBIT Next 3Y56.41%
EBIT Next 5Y37.38%
FCF growth 1Y-67.06%
FCF growth 3Y-22.62%
FCF growth 5Y-11.22%
OCF growth 1Y-20.95%
OCF growth 3Y-8.09%
OCF growth 5Y-2.39%

TransAlta Renewables Inc / RNW.CA FAQ

What is the ChartMill fundamental rating of TransAlta Renewables Inc (RNW.CA) stock?

ChartMill assigns a fundamental rating of 4 / 10 to RNW.CA.


Can you provide the valuation status for TransAlta Renewables Inc?

ChartMill assigns a valuation rating of 4 / 10 to TransAlta Renewables Inc (RNW.CA). This can be considered as Fairly Valued.


What is the profitability of RNW stock?

TransAlta Renewables Inc (RNW.CA) has a profitability rating of 5 / 10.


What is the valuation of TransAlta Renewables Inc based on its PE and PB ratios?

The Price/Earnings (PE) ratio for TransAlta Renewables Inc (RNW.CA) is 41.6 and the Price/Book (PB) ratio is 2.02.


Can you provide the expected EPS growth for RNW stock?

The Earnings per Share (EPS) of TransAlta Renewables Inc (RNW.CA) is expected to grow by 123% in the next year.