TransAlta (TAC) Upgraded to Buy: What Does It Mean for the Stock?

Core Viewpoint - TransAlta (TAC) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which are a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [3][5]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, which in turn affects stock prices [3]. TransAlta's Earnings Outlook - For the fiscal year ending December 2025, TransAlta is expected to earn $0.39 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 8.1% over the past three months, reflecting a positive trend in earnings estimates [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [6]. - The upgrade of TransAlta to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [9].