TransAlta Renewables Inc (RNW.CA) Stock Fundamental Analysis
TSX:RNW - Toronto Stock Exchange - CA8934631091 - Common Stock - Currency: CAD
We assign a fundamental rating of 4 out of 10 to RNW. RNW was compared to 34 industry peers in the Independent Power and Renewable Electricity Producers industry. RNW has only an average score on both its financial health and profitability. RNW has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
RNW had positive earnings in the past year.
RNW had a positive operating cash flow in the past year.
RNW had positive earnings in each of the past 5 years.
Each year in the past 5 years RNW had a positive operating cash flow.
1.2 Ratios
With a Return On Assets value of 2.49%, RNW perfoms like the industry average, outperforming 56.41% of the companies in the same industry.
The Return On Equity of RNW (4.72%) is comparable to the rest of the industry.
With a Return On Invested Capital value of 2.68%, RNW perfoms like the industry average, outperforming 53.85% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for RNW is below the industry average of 5.58%.
| Industry Rank | Sector 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%
1.3 Margins
RNW's Profit Margin of 15.73% is amongst the best of the industry. RNW outperforms 87.18% of its industry peers.
In the last couple of years the Profit Margin of RNW has grown nicely.
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.
With a Gross Margin value of 68.95%, RNW perfoms like the industry average, outperforming 56.41% of the companies in the same industry.
RNW's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector 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%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so RNW is destroying value.
The number of shares outstanding for RNW remains at a similar level compared to 1 year ago.
Compared to 1 year ago, RNW has an improved debt to assets ratio.
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.
Looking at the Altman-Z score, with a value of 1.07, RNW belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.
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 has a Debt to FCF ratio of 9.86. This is amongst the best in 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.
The Debt to Equity ratio of RNW (0.45) is better than 94.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 9.86 | ||
| Altman-Z | 1.07 |
ROIC/WACC0.36
WACC7.52%
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 worse Current ratio (0.87) than 74.36% of its industry peers.
A Quick Ratio of 0.83 indicates that RNW may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.83, RNW is doing worse than 71.79% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.83 |
3. Growth
3.1 Past
RNW shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -30.07%.
RNW shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -13.31% yearly.
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
The Earnings Per Share is expected to grow by 20.90% on average over the next years. This is a very strong growth
The Revenue is expected to decrease by -1.49% on average over the next years.
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.
4. Valuation
4.1 Price/Earnings Ratio
RNW is valuated quite expensively with a Price/Earnings ratio of 41.60.
RNW's Price/Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Earnings ratio of 26.93, RNW is valued quite expensively.
A Price/Forward Earnings ratio of 17.37 indicates a rather expensive valuation of RNW.
Based on the Price/Forward Earnings ratio, RNW is valued a bit cheaper than the industry average as 74.36% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 35.31. RNW is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.6 | ||
| Fwd PE | 17.37 |
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.
The rest of the industry has a similar Price/Free Cash Flow ratio as RNW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 40.13 | ||
| EV/EBITDA | 18.28 |
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.
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%
5. Dividend
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 4.43, 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 2.39.
| Industry Rank | Sector 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
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%
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)
Earnings (Next)
Inst Owners12.12%
Inst Owner ChangeN/A
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap3.33B
Analysts50.77
Price Target13.25 (6.17%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector 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 Rank | Sector 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
Profitability
| Industry Rank | Sector 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%
ROICexcg growth 3Y3.02%
ROICexcg 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 Rank | Sector 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%