TAC
TransAlta Corporation
$13.00
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 40.8% above fair value
You pay
$13.00
Bear
$7.56
Fair
$9.23
Bull
$10.91
Bear
$7.56
-41.9%
$0.42 × 18x P/E
Fair
$9.23
-29.0%
$0.42 × 22x P/E
Bull
$10.91
-16.0%
$0.42 × 26x P/E
Adjust Assumptions
22.0x
0.42$
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
31.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$25.00
Divergence from AlphaVal
63%
Summary
Applying a 22x P/E to adjusted EPS of $0.42, the base-case value is $9.23 per share. DDM cross-check: $5.95.
Warnings
Dividend-based valuation: $5.95 (below our primary estimate by 36%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $25.00 (from 9 analysts). Our estimate is 63% below the consensus -- consider that gap carefully.
Financial statements were converted from CAD into USD using USDCAD at 0.7115 USD per CAD.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples