TransAlta (NYSE:TAC) Issues Earnings Results, Beats Expectations By $0.02 EPS

Key Points

• TransAlta beat quarterly earnings expectations, reporting EPS of $0.13 versus the $0.11 consensus estimate. Adjusted EBITDA reached CAD 291 million, free cash flow was CAD 143 million, and fleet availability stood at 90.2%, supporting reaffirmed 2026 guidance.
• The company agreed to acquire two Colorado gas peaking facilities for US$1 billion, expecting about CAD 110 million in annual contracted adjusted EBITDA and immediate free-cash-flow-per-share accretion after the anticipated fourth-quarter 2026 closing.
• Challenges remain: Alberta spot prices fell to CAD 29/MWh, some hydro and energy-marketing results weakened, and S&P revised TransAlta’s BB+ credit outlook to negative. Shares declined to $12.50, while analysts maintained a Moderate Buy consensus with a $23 average price target.

TransAlta (NYSE:TAC - Get Free Report) TSE: TA announced its quarterly earnings data on Friday. The utilities provider reported $0.13 EPS for the quarter, topping the consensus estimate of $0.11 by $0.02, Zacks reports. TransAlta had a negative net margin of 9.46% and a positive return on equity of 9.52%.

Here are the key takeaways from TransAlta's conference call:

• Solid second-quarter performance: TransAlta reported adjusted EBITDA of CAD 291 million, free cash flow of CAD 143 million, and fleet availability of 90.2%, reaffirming its 2026 guidance.
• The company’s Alberta hedging and optimization strategies mitigated weak market conditions; approximately 4,500 GWh for the remainder of 2026 and 6,600 GWh for 2027 are hedged at about CAD 64/MWh, well above current forward pricing.
• TransAlta agreed to acquire two Colorado gas peaking facilities for US$1 billion, expecting approximately CAD 110 million of annual, contracted adjusted EBITDA and immediate free-cash-flow-per-share accretion after the anticipated fourth-quarter 2026 closing.
• Alberta’s new data-center regulations may enable TransAlta to use underutilized gas-fired steam capacity to support AI infrastructure, with the company targeting greater clarity from AESO and continuing to advance its 230 MW partnership with CPP Investments and Brookfield.
• Alberta spot prices averaged only CAD 29/MWh, down from CAD 40/MWh a year earlier, while hydro and energy-marketing results declined; additionally, S&P shifted TransAlta’s BB+ credit-rating outlook to negative, increasing the importance of asset sales and balance-sheet improvement.

TransAlta Stock Performance

Shares of TAC stock traded down $0.36 during trading on Friday, reaching $12.50. 2,012,894 shares of the company's stock traded hands, compared to its average volume of 1,557,094. The company has a market capitalization of $3.95 billion, a P/E ratio of -23.15 and a beta of 0.69. The company has a current ratio of 0.76, a quick ratio of 0.70 and a debt-to-equity ratio of 6.61. The firm's 50-day moving average is $13.62 and its 200 day moving average is $13.18. TransAlta has a 1 year low of $11.38 and a 1 year high of $17.88.

TransAlta Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, October 1st. Stockholders of record on Tuesday, September 1st will be given a $0.07 dividend. The ex-dividend date of this dividend is Tuesday, September 1st. This represents a $0.28 annualized dividend and a dividend yield of 2.2%. TransAlta's payout ratio is -37.04%.

Institutional Inflows and Outflows

A number of hedge funds have recently bought and sold shares of the business. Caitong International Asset Management Co. Ltd purchased a new stake in shares of TransAlta during the fourth quarter worth $37,000. Ritter Alpha LP purchased a new position in shares of TransAlta in the fourth quarter valued at $131,000. Virtu Financial LLC purchased a new position in shares of TransAlta in the fourth quarter valued at $147,000. Orion Porfolio Solutions LLC bought a new stake in shares of TransAlta during the 2nd quarter valued at $159,000. Finally, Public Sector Pension Investment Board bought a new stake in shares of TransAlta during the 4th quarter valued at $194,000. 59.00% of the stock is currently owned by hedge funds and other institutional investors.

Analysts Set New Price Targets

TAC has been the subject of several research analyst reports. Canadian Imperial Bank of Commerce restated an "outperform" rating on shares of TransAlta in a research note on Friday, July 17th. Zacks Research downgraded TransAlta from a "hold" rating to a "strong sell" rating in a research note on Friday, July 17th. TD Cowen assumed coverage on TransAlta in a report on Wednesday, June 10th. They set a "buy" rating for the company. TD Securities reissued a "buy" rating on shares of TransAlta in a research report on Thursday, May 7th. Finally, Weiss Ratings upgraded TransAlta from a "sell (d)" rating to a "sell (d+)" rating in a research note on Tuesday, June 16th. One equities research analyst has rated the stock with a Strong Buy rating, six have issued a Buy rating and two have issued a Sell rating to the stock. According to MarketBeat, TransAlta presently has a consensus rating of "Moderate Buy" and an average target price of $23.00.

TransAlta Company Profile

TransAlta Corporation, originally founded in 1909 as Calgary Power Company Ltd., is a publicly traded energy company specializing in the development, ownership and operation of power generation and transmission assets. Headquartered in Calgary, Alberta, TransAlta has grown from its early hydroelectric roots into a diversified energy provider with a multi-fuel generating fleet.

The company's core business activities encompass power generation, asset management and energy trading services.

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