Azure Power Global (NYSE: AZRE) and TransAlta (NYSE:TAC) are both small-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Valuation & Earnings

This table compares Azure Power Global and TransAlta’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Azure Power Global $78.46 million 4.80 $55.00 million ($2.39) -6.07
TransAlta $1.91 billion 0.96 $725.42 million $0.09 71.12

TransAlta has higher revenue and earnings than Azure Power Global. Azure Power Global is trading at a lower price-to-earnings ratio than TransAlta, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

43.1% of Azure Power Global shares are held by institutional investors. Comparatively, 50.6% of TransAlta shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Azure Power Global and TransAlta’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Azure Power Global -18.15% -9.96% -1.76%
TransAlta 0.80% -2.82% 0.15%

Dividends

TransAlta pays an annual dividend of $0.13 per share and has a dividend yield of 2.0%. Azure Power Global does not pay a dividend. TransAlta pays out 144.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of recent recommendations and price targets for Azure Power Global and TransAlta, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Azure Power Global 0 0 3 0 3.00
TransAlta 0 4 0 0 2.00

Azure Power Global presently has a consensus price target of $22.00, suggesting a potential upside of 51.62%. TransAlta has a consensus price target of $7.00, suggesting a potential upside of 9.37%. Given Azure Power Global’s stronger consensus rating and higher possible upside, research analysts plainly believe Azure Power Global is more favorable than TransAlta.

Summary

TransAlta beats Azure Power Global on 8 of the 13 factors compared between the two stocks.

Azure Power Global Company Profile

Azure Power Global Limited is an India-based power producer. The Company sells solar power in India on long term fixed price contracts to its customers. The Company is also developing micro-grid applications for the highly fragmented and underserved electricity market in India. The Company operates approximately 20 utility scale projects and several commercial rooftop projects with a combined rated capacity of approximately 240 megawatts. The Company’s services include design, engineering and construction of grid integrated solar installations; off grid solar installations for villages, hamlets and remote areas; turnkey solar installations for commercial and residential complexes on roof tops, as back up and alternate source, and operation and maintenance of solar installations. The Company’s projects include Project Punjab, Rajasthan Projects, Gandhinagar Smart City Rooftop Project and Micro-Grids in Bihar and Uttar Pradesh.

TransAlta Company Profile

TransAlta Corporation (TransAlta) is a non-regulated electricity generation and energy marketing company with an aggregate net ownership interest of approximately 8,720 megawatts of generating capacity. The Company is engaged in the production and sale of electric energy. It focuses on generating and marketing electricity in Canada, the United States and Western Australia through its diversified portfolio of facilities fuelled by coal, natural gas, diesel, hydro, wind and solar. TransAlta is organized into eight business segments: Canadian Coal, U.S. Coal, Canadian Gas, Australian Gas, Wind and Solar, Hydro, Energy Marketing and Corporate. The Canadian Coal, U.S. Coal, Canadian Gas, Australian Gas, Wind and Solar, and Hydro segments are responsible for constructing, operating and maintaining its electrical generation. All the segments are supported by a Corporate segment, which includes the Corporation’s central financial, legal, administrative, and investing functions.

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