Operating Margin - TransAlta Renewables Inc (TSX:RNW)

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Price: 12.48 CAD 1.13%

Market Cap: 3.3B CAD

17.9%

Current

23%

Average

13.8%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

17.9%

Operating Profit

89m

Revenue

496m

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
CA		TransAlta Renewables Inc TSX:RNW	3.3B CAD	18%
CN		China Yangtze Power Co Ltd SSE:600900	681.4B CNY	53%
ID	B	Barito Renewables Energy PT Tbk IDX:BREN	1 254.2T IDR	72%
CN		Huaneng Lancang River Hydropower Inc SSE:600025	168.7B CNY	50%
IN		Adani Green Energy Ltd NSE:ADANIGREEN	1.7T INR	57%
CN		China Longyuan Power Group Corp Ltd HKEX:916	144.8B HKD	36%
CN		China Three Gorges Renewables Group Co Ltd SSE:600905	118.1B CNY	34%
ES	E	EDP Renovaveis SA ELI:EDPR	12.5B EUR	24%
CN		Sichuan Chuantou Energy Co Ltd SSE:600674	69.9B CNY	31%
IN		NHPC Ltd NSE:NHPC	769.6B INR	40%
IN	N	Ntpc Green Energy Ltd NSE:NTPCGREEN	757.7B INR	51%

TransAlta Renewables Inc
Glance View

Market Cap

3.3B CAD

Industry

Utilities

TransAlta Renewables Inc. has carved its niche in the field of renewable energy, emerging as a key player with a diversified portfolio. This Calgary-based company functions primarily as an owner and operator of clean energy assets, harnessing the power of the wind, sun, and flowing water. TransAlta Renewables is a subsidiary of TransAlta Corporation, and its operations span Canada, the United States, and Australia. What sets the company apart is its strategic focus on sustainable energy solutions, driven by its expansive assets including wind farms, solar parks, hydroelectric plants, and natural gas facilities. By prioritizing these renewable sources, the company not only contributes to the global energy transition but also capitalizes on the growing demand for clean energy. The company generates revenue through the sale of electricity generated from its renewable energy installations. TransAlta Renewables enters into power purchase agreements (PPAs) and other long-term contracts with utilities and corporate customers, ensuring a stable cash flow and mitigating market price volatility. These contracts usually span several years, guaranteeing a steady revenue stream and enhancing predictability for its earnings. Additionally, the company benefits from government incentives and regulatory frameworks aimed at promoting clean energy, further solidifying its financial health. By maintaining a strong asset base and focusing on cost-effective operations and strategic acquisitions, TransAlta Renewables aims to deliver reliable returns to its shareholders while championing green energy initiatives.

View RNW Analysis

RNW Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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TransAlta Renewables Inc
TSX:RNW