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

TSX:RNW • CA8934631091

Current stock price

12.48 CAD
+0.14 (+1.13%)
Last:

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

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

  • The Return On Assets of RNW (2.49%) is comparable to the rest of the industry.
  • RNW's Return On Equity of 4.72% is in line compared to the rest of the industry. RNW outperforms 53.85% of its industry peers.
  • 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.
  • RNW had an Average Return On Invested Capital over the past 3 years of 3.02%. This is in line with the industry average of 2.46%.
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.
  • Looking at the Operating Margin, with a value of 17.94%, RNW is doing worse than 64.10% of the companies in the same industry.
  • In the last couple of years the Operating Margin of RNW has declined.
  • RNW has a Gross Margin of 68.95%. This is comparable 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

  • The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so RNW is destroying value.
  • Compared to 1 year ago, RNW has about the same amount of shares outstanding.
  • The debt/assets ratio for RNW has been reduced compared to a year ago.
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

  • RNW has an Altman-Z score of 1.07. This is a bad value and indicates that RNW is not financially healthy and even 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 has a better Debt to Equity ratio (0.45) than 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

  • A Current Ratio of 0.87 indicates that RNW may have some problems paying its short term obligations.
  • RNW has a worse Current ratio (0.87) than 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's Quick ratio of 0.83 is on the low side compared to the rest of the industry. RNW is outperformed by 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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3

3. RNW.CA Growth Analysis

3.1 Past

  • RNW shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -30.07%.
  • 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%.
  • RNW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.06% yearly.
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.
  • RNW is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -1.49% yearly.
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

  • When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
  • 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

  • Based on the Price/Earnings ratio of 41.60, the valuation of RNW can be described as expensive.
  • The rest of the industry has a similar Price/Earnings ratio as RNW.
  • RNW is valuated expensively when we compare the Price/Earnings ratio to 26.64, which is the current average of the S&P500 Index.
  • With a Price/Forward Earnings ratio of 17.37, RNW is valued on the expensive side.
  • RNW's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. RNW is cheaper than 74.36% of the companies in the same industry.
  • RNW's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.36.
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 80

4.2 Price Multiples

  • 74.36% of the companies in the same industry are cheaper than RNW, based on the Enterprise Value to EBITDA ratio.
  • RNW's Price/Free Cash Flow ratio is in line with 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

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

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6

5. RNW.CA Dividend Analysis

5.1 Amount

  • With a Yearly Dividend Yield of 7.53%, RNW is a good candidate for dividend investing.
  • Compared to an average industry Dividend Yield of 3.48, RNW pays a better dividend. On top of this RNW pays more dividend than 87.18% of the companies listed in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.82, RNW pays a better dividend.
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.
  • The dividend of RNW is growing, but earnings are growing more, so the dividend growth is 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
Industry Strength35.43
Industry Growth14.93
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 Number0 (-100%)
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 Fundamental Analysis 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.


How profitable is TransAlta Renewables Inc (RNW.CA) stock?

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


What are the PE and PB ratios of TransAlta Renewables Inc (RNW.CA) stock?

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


How sustainable is the dividend of TransAlta Renewables Inc (RNW.CA) stock?

The dividend rating of TransAlta Renewables Inc (RNW.CA) is 7 / 10 and the dividend payout ratio is 321.79%.