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 39 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.
In the past year RNW had a positive cash flow from operations.
In the past 5 years RNW has always been profitable.
Each year in the past 5 years RNW had a positive operating cash flow.
1.2 Ratios
RNW's Return On Assets of 2.49% is in line compared to the rest of the industry. RNW outperforms 56.41% of its industry peers.
With a Return On Equity value of 4.72%, RNW perfoms like the industry average, outperforming 53.85% of the companies in the same 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.
The Average Return On Invested Capital over the past 3 years for RNW is in line with the industry average of 4.15%.
| 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 has a Profit Margin of 15.73%. This is amongst the best in the industry. RNW outperforms 87.18% of its industry peers.
In the last couple of years the Profit Margin of RNW has grown nicely.
RNW has a Operating Margin of 17.94%. This is in the lower half of the industry: RNW underperforms 64.10% of its industry peers.
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
RNW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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.
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.
With an excellent Altman-Z score value of 1.07, RNW belongs to the best 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.
The Debt to FCF ratio of RNW (9.86) is better than 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 Debt to Equity ratio of 0.45. This is amongst the best in the industry. RNW outperforms 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
A Current Ratio of 0.87 indicates that RNW may have some problems paying 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.
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%.
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
The Earnings Per Share is expected to grow by 20.90% on average over the next years. This is a very strong growth
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.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 41.60, which means the current valuation is very expensive for RNW.
The rest of the industry has a similar Price/Earnings ratio as RNW.
RNW's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 28.22.
A Price/Forward Earnings ratio of 17.37 indicates a rather expensive valuation of RNW.
Compared to the rest of the industry, the Price/Forward Earnings ratio of RNW indicates a somewhat cheap valuation: RNW is cheaper than 74.36% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of RNW to the average of the S&P500 Index (20.86), we can say RNW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.6 | ||
| Fwd PE | 17.37 |
4.2 Price Multiples
RNW's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. RNW is more expensive than 74.36% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of RNW is on the same level as its industry peers.
| 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 4.58, 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 2.44.
| 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
RNW pays out 321.79% of its income as dividend. 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%