TransAlta Renewables Inc (RNW.CA) Stock Fundamental Analysis

TSX:RNW • CA8934631091

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

4

RNW gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 32 industry peers in the Independent Power and Renewable Electricity Producers industry. RNW scores quite bad on profitability, while its financial health is fine. Not spectacular, but in line with the averages. RNW is valued correctly, but it does not seem to be growing.


Dividend Valuation Growth Profitability Health

3

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.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

  • Looking at the Return On Assets, with a value of 2.49%, RNW is in line with its industry, outperforming 56.41% of the companies in the same industry.
  • RNW has a Return On Equity (4.72%) which is in line with its industry peers.
  • RNW has a Return On Invested Capital of 2.68%. This is comparable 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 3.78%.
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

  • With an excellent Profit Margin value of 15.73%, RNW belongs to the best of the industry, outperforming 87.18% of the companies in the same industry.
  • 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.
  • RNW's Operating Margin has declined in the last couple of years.
  • Looking at the Gross Margin, with a value of 68.95%, RNW is in line with its industry, outperforming 56.41% of the companies in the same industry.
  • 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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ROAROEROICOperating and Profit MarginShow most profitable peers

4

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.
  • RNW has about the same amout of shares outstanding than it did 1 year ago.
  • 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.
  • The Debt to FCF ratio of RNW is 9.86, which is on the high side as it means it would take RNW, 9.86 years of fcf income to pay off all of its debts.
  • With an excellent Debt to FCF ratio value of 9.86, RNW belongs to the best of the industry, outperforming 84.62% of the companies in the same industry.
  • A Debt/Equity ratio of 0.45 indicates that RNW is not too dependend on debt financing.
  • 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 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.
  • Looking at the Current ratio, with a value of 0.87, RNW is doing worse than 74.36% of the companies in the same industry.
  • A Quick Ratio of 0.83 indicates that RNW may have some problems paying 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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WACCDebt/EquityHow to determine the health of a companyAltman-Z scoreShow peers with great health

3

3. Growth

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

  • 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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Find the best growth stocksShow best growing peers

4

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.
  • The average S&P500 Price/Earnings ratio is at 27.97. RNW is valued slightly more expensive when compared to this.
  • With a Price/Forward Earnings ratio of 17.37, RNW is valued on the expensive side.
  • 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 27.96. RNW is valued slightly cheaper when compared to this.
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 50 100 150 200

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.
  • 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. Dividend

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 4.76, 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 1.79.
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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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.