TransAlta (TSX:TA): Is There More Value Left After a 31% Three-Month Rally?

TransAlta (TSX:TA) has been generating conversation lately, especially as its stock delivered a 3% return over the past day and is up 31% in the past 3 months. The changing performance has caught the eye of investors who are monitoring utility sector trends.

See our latest analysis for TransAlta.

TransAlta's share price has surged in recent months, showing a 31% gain over the past quarter and building momentum that has attracted renewed investor interest. Despite some short-term volatility, the stock’s one-year total shareholder return of 54% demonstrates notable long-term strength within evolving sector dynamics.

If TransAlta’s recent moves have you rethinking your portfolio, this could be an ideal opportunity to broaden your search and discover fast growing stocks with high insider ownership

The big question now is whether TransAlta’s impressive rally means it is undervalued and primed for more upside, or if the market has already priced in its future growth and potential gains for new investors.

Most Popular Narrative: 6.8% Undervalued

Compared to the last close price of CA$21.77, the most-followed narrative sees TransAlta’s fair value noticeably higher, providing room for upside if analysts’ assumptions hold. The pricing reflects a mix of shifting market expectations and renewed belief in the company’s evolving earnings profile.

Ongoing execution of renewable development, repowering, and asset optimization initiatives, including expanding and re-purposing legacy sites (like Centralia) and leveraging portfolio diversity, is expected to increase predictable contracted cash flows and EBITDA growth. This may also drive margin expansion through economies of scale.

Read the complete narrative.

Want the real fuel behind this number? The fair value is linked to a profit turnaround, rising margins, and a growth multiple that commands real attention. What forecasts are driving analyst conviction, and could an earnings transformation recalibrate the stock’s trajectory? Find out what’s under the hood of this valuation.

Result: Fair Value of $23.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, uncertainty around decarbonization mandates and increased competition from new energy projects could quickly challenge these bullish forecasts and test investor conviction.

Find out about the key risks to this TransAlta narrative.

Another View: Multiples Tell a More Cautious Story

Looking at price-to-sales ratios instead, TransAlta trades at 2.6x, which is cheaper than both its North American renewable energy industry average of 2.9x and equal to peer averages. However, the fair ratio is just 1.1x. This suggests the stock might not have as much upside as hoped, especially if the market corrects. Could exuberance be outpacing fundamentals?

Story Continues

See what the numbers say about this price — find out in our valuation breakdown.TSX:TA PS Ratio as at Nov 2025

Build Your Own TransAlta Narrative

If you see things differently or want to shape your own perspective, you can build a personalized narrative in just a few minutes: Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding TransAlta.

Looking for More Smart Investment Moves?

Expand your horizons and give your portfolio a fresh boost. The Simply Wall St Screener spotlights standout opportunities you might not spot anywhere else.

Boost your passive income potential by tapping into these 16 dividend stocks with yields > 3% and uncovering companies with yields over 3% that keep rewarding shareholders. Get ahead of the tech curve as you track the top contenders riding the artificial intelligence wave by searching through these 25 AI penny stocks. Uncover overlooked bargains by reviewing these 874 undervalued stocks based on cash flows, offering you stocks that might be trading for less than their true potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include TA.TO.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

View Comments