Value
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 9.0 |
| EV/EBITDA | 4.7 |
| Fwd P/E | 3.4 |
| PEG | 10.0 |
- ▸Forward P/E: 33.1x
- ▸PEG: 0.19
TAC · Why this verdict
Why TransAlta (TAC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue has declined 26% year-over-year with the quality score of 2.7 below the 4.0 minimum threshold, reflecting that the power generation business is contracting materially and core financials do not meet basic investment quality standards. Growth breakdown | Revenue stabilizes and returns to positive growth within 4 reported quarters, and the quality score rises above 4.0 as operating performance improves. | →Stable |
| CounterIndependent power producers frequently show revenue volatility tied to energy contract renewals and commodity cycles; a single year's revenue decline may reverse as new long-term power purchase agreements are signed. | ||
On-balance volume is rising despite flat to modestly positive price action, suggesting institutional accumulation is occurring at current levels near $13.57, which historically precedes positive price discovery. Momentum breakdown | Price rises above $15 within 9 months, more than 10% above the current level of $13.57, as accumulated volume translates into price appreciation. | →Stable |
| CounterRising on-balance volume in a low-liquidity utility name can reflect a handful of large block trades rather than broad institutional conviction, and the signal is less reliable for small-cap power producers. | ||
The earnings record shows two beats and two misses in the last four quarters, with the misses of negative 175% and negative 127% being deeply negative surprises against already low estimates, signaling highly unpredictable financial performance. Earnings | The company delivers at least 3 beats in the next 4 quarters and the average EPS surprise remains above 0%, indicating the earnings trajectory has stabilized. | →Stable |
| CounterThe most recent quarter produced a 700% beat versus a very small baseline estimate, and power producers can have lumpy earnings from one-time items that distort the beat/miss pattern. | ||
A forward price-to-earnings of 32.9x is expensive for an independent power producer with declining revenues, a quality score below floor, and no identified competitive moat, suggesting the market is pricing in a recovery that has not yet materialized. Valuation breakdown | The forward price-to-earnings contracts below 20x within 12 months, either through earnings growing faster than expected or through price reflecting the fundamental reality of the business. | →Stable |
| CounterPower producer valuations are often driven by asset replacement value and contracted cash flows rather than near-term earnings; a high forward multiple may reflect long-duration asset value rather than near-term earnings overvaluation. | ||
Revenue has declined 26% year-over-year with the quality score of 2.7 below the 4.0 minimum threshold, reflecting that the power generation business is contracting materially and core financials do not meet basic investment quality standards.
→StableGrowth breakdown
- Expectation
- Revenue stabilizes and returns to positive growth within 4 reported quarters, and the quality score rises above 4.0 as operating performance improves.
CounterIndependent power producers frequently show revenue volatility tied to energy contract renewals and commodity cycles; a single year's revenue decline may reverse as new long-term power purchase agreements are signed.
On-balance volume is rising despite flat to modestly positive price action, suggesting institutional accumulation is occurring at current levels near $13.57, which historically precedes positive price discovery.
→StableMomentum breakdown
- Expectation
- Price rises above $15 within 9 months, more than 10% above the current level of $13.57, as accumulated volume translates into price appreciation.
CounterRising on-balance volume in a low-liquidity utility name can reflect a handful of large block trades rather than broad institutional conviction, and the signal is less reliable for small-cap power producers.
The earnings record shows two beats and two misses in the last four quarters, with the misses of negative 175% and negative 127% being deeply negative surprises against already low estimates, signaling highly unpredictable financial performance.
→StableEarnings
- Expectation
- The company delivers at least 3 beats in the next 4 quarters and the average EPS surprise remains above 0%, indicating the earnings trajectory has stabilized.
CounterThe most recent quarter produced a 700% beat versus a very small baseline estimate, and power producers can have lumpy earnings from one-time items that distort the beat/miss pattern.
A forward price-to-earnings of 32.9x is expensive for an independent power producer with declining revenues, a quality score below floor, and no identified competitive moat, suggesting the market is pricing in a recovery that has not yet materialized.
→StableValuation breakdown
- Expectation
- The forward price-to-earnings contracts below 20x within 12 months, either through earnings growing faster than expected or through price reflecting the fundamental reality of the business.
CounterPower producer valuations are often driven by asset replacement value and contracted cash flows rather than near-term earnings; a high forward multiple may reflect long-duration asset value rather than near-term earnings overvaluation.
TrendMatrix Research · core thesis
Engine thesis — one sentence
TransAlta is an independent power producer with volume accumulation and rising on-balance volume suggesting institutional buying interest, but severely declining revenue of negative 26% year-over-year and a quality score of 2.7 below the minimum threshold indicate the business is contracting faster than the stock price reflects.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.9 |
| Gross margin | 2.3 |
| Op margin | 7.4 |
| Net margin | 0.0 |
| Current ratio | 3.0 |
| Moat | 2.5 |
| Piotroski F | 5.6 |
- ▸No competitive moat
- ▸Quality concerns
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 10.0 |
- ▸Declining revenue: -26%
Momentum
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.7 |
| OBV | 1.0 |
| MA position | 7.2 |
| Volume | 5.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+1.5%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.9 |
| Price target | 4.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (2.0) — signal dampened
Insider
5.0/10data confidence 50%Peer rank
2.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.3 |
| quality rank | 1.2 |
| growth rank | 1.3 |
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.5 |
| support resistance | 3.1 |
| 52w position | 5.2 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 7.9 |
| volatility | 5.7 |
| put call | 10.0 |
| implied vol | 0.7 |
| beta | 10.0 |
| debt equity | 2.0 |
- ▸High IV: 76%
Catalyst
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 3.5 |
- ▸Earnings concerns: 2B/2M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.4<4.5
- ASYMMETRY:-1.8=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.84
Upside
-17.8%
Downside
9.7%
Sizing output
AVOID
SetupRange Bound — RSI 53 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $4.3B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 6.8 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:4.4<4.5.
The strongest dimensions are Value at 6.8, Risk (lower is worse) at 6.5, and Catalyst at 5.4; the weakest are Peer rank at 2.2, Quality at 2.7, and Technical at 4.3. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.84 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue Decline Quality Below Floor
Trip ifRevenue declines by more than 10% in at least 2 of the next 4 reported quarters compared to the same period in the prior year.
- P2Institutional Buying Volume Signal
Trip ifPrice falls below $12, more than 11% below the current level of $13.57, indicating the accumulation hypothesis has not led to price appreciation.
- P3Earnings Inconsistency Erratic Results
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarterly reports, indicating the earnings instability is structural rather than transitional.
- P4Forward Pe Valuation Vs Quality
Trip ifForward price-to-earnings remains above 30x for more than 6 consecutive months without any corresponding improvement in revenue growth above 0%.