Transalta Renewables shows another solid quarter
Way back in August 9,2016 Transalta
Renewables reported it's second quarter results.There was such a large bunch of corporate results reported at the time that it got overlooked but only temporarily.Transalta Renewables (RNW) pulled off a strong quarter.It showed comparable EBITDA of $89 million compared to $36 million for the second quarter in 2016.Furthermore it reported 6 month comparable EBITDA of $203 million compared to $108 million in 2015.In other words, a 50% increase in earnings for the first half and a 67% increase for the second quarter.This increase was reported with only a slight pickup in the price of oil in it's chief market of Alberta.
More Downloads
Transalta Renewables has been around since about 2012.It was made from the assets that it's parent Transalta downloaded to it.These downloads were beneficial to both companies as it allowed for cash to flow to Transalta and it also retained it's share ownership of RNW.Presently it owns about 66 to 70% of Transalta Renewables.In 2015 RNW showed that it owned 12
hydrogenerating facilities and 16 wind generating projects plus a few natural gas generating facilities.Now it owns 13 hydro facilities and 18 wind projects plus 8 natural gas generating facilities and one natural gas pipeline.The last download included an Australian natural gas facility and an Australian natural gas pipeline.Most analysts believe that these two projects will add considerably to profitability when finished in mid-2017.But will Transalta have more downloads coming up and if so will it be in 2017?
The Earnings Puzzle
Qtrade, a broker shows earnings for 2015 of $1.18 per share or more than $250 million for the year.Whereas Yahoo Finance shows earnings per share of $.56 per share or about $120 million for the year.Also Yahoo Finance shows earnings of $169 million for the last twelve months (which includes the first 6 months of 2016).So the earnings for 2015 are variable depending on whose information you use.But 2016 seems clearer ;RNW says in their quarterly report that EBITDA will be $89 million for the quarter and $203 million for the half.It is clear that this is an increase over 2015 but not clear how much of an increase.Transalta Renewables says it will meet the upper end of guidance for 2016.This indicates that EBITDA will likely be around $400 to $425 million or about $1.75 to $1.85 per share.This is either an almost 300% increase (if you use Yahoo Finance figures) or a 70 to 75% increase (if you use Qtrade figures).And this does not include any earnings from the new Australian assets;they will only be accretive in 2017.
Transalta's next move
There is no doubt that RNW helps to buoy up Transalta's share price.But investors are wondering if they expect to download more assets by 2017.Transalta can gain by increasing it's ownership of RNW and financing the transferred assets for cash.Transalta Renewables has 2441 MW of generating capacity now so will they want it to have 3000 to 3500 MW?Also Transalta owns about 66 to 75% of RNW shares now and do they want to own 75 to 80%?This blog expects there will be no more downloads in 2016 and no earnings from the Australian assets in 2016.Still Transalta Renewables should earn at least $1.70 per share of earnings for 2016 and this can easily support a price of $16.00 per share with only a 9 to 10 P/E ratio which is pretty cheap even in this mediocre market.
More Downloads
Transalta Renewables has been around since about 2012.It was made from the assets that it's parent Transalta downloaded to it.These downloads were beneficial to both companies as it allowed for cash to flow to Transalta and it also retained it's share ownership of RNW.Presently it owns about 66 to 70% of Transalta Renewables.In 2015 RNW showed that it owned 12
hydrogenerating facilities and 16 wind generating projects plus a few natural gas generating facilities.Now it owns 13 hydro facilities and 18 wind projects plus 8 natural gas generating facilities and one natural gas pipeline.The last download included an Australian natural gas facility and an Australian natural gas pipeline.Most analysts believe that these two projects will add considerably to profitability when finished in mid-2017.But will Transalta have more downloads coming up and if so will it be in 2017?
The Earnings Puzzle
Qtrade, a broker shows earnings for 2015 of $1.18 per share or more than $250 million for the year.Whereas Yahoo Finance shows earnings per share of $.56 per share or about $120 million for the year.Also Yahoo Finance shows earnings of $169 million for the last twelve months (which includes the first 6 months of 2016).So the earnings for 2015 are variable depending on whose information you use.But 2016 seems clearer ;RNW says in their quarterly report that EBITDA will be $89 million for the quarter and $203 million for the half.It is clear that this is an increase over 2015 but not clear how much of an increase.Transalta Renewables says it will meet the upper end of guidance for 2016.This indicates that EBITDA will likely be around $400 to $425 million or about $1.75 to $1.85 per share.This is either an almost 300% increase (if you use Yahoo Finance figures) or a 70 to 75% increase (if you use Qtrade figures).And this does not include any earnings from the new Australian assets;they will only be accretive in 2017.
Transalta's next move
There is no doubt that RNW helps to buoy up Transalta's share price.But investors are wondering if they expect to download more assets by 2017.Transalta can gain by increasing it's ownership of RNW and financing the transferred assets for cash.Transalta Renewables has 2441 MW of generating capacity now so will they want it to have 3000 to 3500 MW?Also Transalta owns about 66 to 75% of RNW shares now and do they want to own 75 to 80%?This blog expects there will be no more downloads in 2016 and no earnings from the Australian assets in 2016.Still Transalta Renewables should earn at least $1.70 per share of earnings for 2016 and this can easily support a price of $16.00 per share with only a 9 to 10 P/E ratio which is pretty cheap even in this mediocre market.
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