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Reasons to Add TransAlta (TAC) to Your Portfolio Right Now
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TransAlta Corporation (TAC - Free Report) continues to benefit from providing safe, reliable and clean energy to its customers. Given its growth opportunities, TAC makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this current Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pinned at 51 cents and 53 cents, respectively. The consensus estimate for 2024 and 2025 EPS has moved up 10.9% and 29.3%, respectively, in the past 60 days.
The company delivered an average earnings surprise of 142.6% in the last four quarters.
Return on Equity (ROE)
The metric indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, TransAlta’s ROE is 48.42%, higher than the industry’s average of 10.26%. This indicates that the company has been utilizing the funds more constructively than its peers in the electric utility industry.
Dividend & Share Buyback
The company has been consistently increasing the value of its stockholders by paying dividends and through the buyback of shares. TAC has raised dividends 13 times in the past five years. Its current dividend yield is 2.41%, better than the Zacks S&P 500 Composite's average of 1.58%.
TransAlta’s management announced an enhanced common share repurchase program for 2024 of up to $150 million toward the repurchase of common shares. The company has plans to return nearly 40% of its free cash flow to shareholders in 2024, through dividends and share buybacks.
Liquidity and Financial Position
As of Dec 31, 2023, TransAlta had access to $1.7 billion in liquidity, including $345 million in cash, net of bank overdraft, which significantly exceeds the funds required for committed growth, sustaining capital and productivity projects.
Times interest earned (TIE) ratio of the company at the end of 2023 was 4.1. The strong TIE ratio also indicates that the company has enough financial strength to meet its interest burden.
Development Plans
The company aims to add 10 Gigawatt of new assets to its portfolio by 2028 and invest $3.5 billion to achieve its production target.
Price Performance
In the past couple of days, the company’s shares gained 0.9% compared with the industry’s 0.6% growth.
DTE’s long-term (three to five years) earnings growth rate is 6%. The Zacks Consensus Estimate of 2024 EPS of $6.70 has moved up 0.5% in the past 60 days.
UTL’s long-term earnings growth rate is 7.1%. The Zacks Consensus Estimate of 2024 EPS of $6.70 has moved up 0.4% in the past 60 days.
NI’s long-term earnings growth rate is 7.2%. It delivered an average earnings surprise of 5.6% in the last four quarters.
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Reasons to Add TransAlta (TAC) to Your Portfolio Right Now
TransAlta Corporation (TAC - Free Report) continues to benefit from providing safe, reliable and clean energy to its customers. Given its growth opportunities, TAC makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this current Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pinned at 51 cents and 53 cents, respectively. The consensus estimate for 2024 and 2025 EPS has moved up 10.9% and 29.3%, respectively, in the past 60 days.
The company delivered an average earnings surprise of 142.6% in the last four quarters.
Return on Equity (ROE)
The metric indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, TransAlta’s ROE is 48.42%, higher than the industry’s average of 10.26%. This indicates that the company has been utilizing the funds more constructively than its peers in the electric utility industry.
Dividend & Share Buyback
The company has been consistently increasing the value of its stockholders by paying dividends and through the buyback of shares. TAC has raised dividends 13 times in the past five years. Its current dividend yield is 2.41%, better than the Zacks S&P 500 Composite's average of 1.58%.
TransAlta’s management announced an enhanced common share repurchase program for 2024 of up to $150 million toward the repurchase of common shares. The company has plans to return nearly 40% of its free cash flow to shareholders in 2024, through dividends and share buybacks.
Liquidity and Financial Position
As of Dec 31, 2023, TransAlta had access to $1.7 billion in liquidity, including $345 million in cash, net of bank overdraft, which significantly exceeds the funds required for committed growth, sustaining capital and productivity projects.
Times interest earned (TIE) ratio of the company at the end of 2023 was 4.1. The strong TIE ratio also indicates that the company has enough financial strength to meet its interest burden.
Development Plans
The company aims to add 10 Gigawatt of new assets to its portfolio by 2028 and invest $3.5 billion to achieve its production target.
Price Performance
In the past couple of days, the company’s shares gained 0.9% compared with the industry’s 0.6% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are DTE Energy (DTE - Free Report) , Unitil Corporation (UTL - Free Report) and NiSource (NI - Free Report) , each presently carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE’s long-term (three to five years) earnings growth rate is 6%. The Zacks Consensus Estimate of 2024 EPS of $6.70 has moved up 0.5% in the past 60 days.
UTL’s long-term earnings growth rate is 7.1%. The Zacks Consensus Estimate of 2024 EPS of $6.70 has moved up 0.4% in the past 60 days.
NI’s long-term earnings growth rate is 7.2%. It delivered an average earnings surprise of 5.6% in the last four quarters.