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Targa Resources (TRGP)
NYSE:TRGP
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Targa Resources
(NYSE:TRGP)72Outperform
Positive Factors
Capital Returns
TRGP repurchased $168 million of equity and will raise its dividend per share to $4.00 in FY25, indicating strong capital returns.
Growth Outlook
TRGP has benefited from another stretch of outperformance, following strong signaling its medium-term growth outlook is tracking better than expected.
Negative Factors
Financial Performance
The adjusted EBITDA guidance for Targa Resources Corp. is below the consensus expectation.
Targa Resources (TRGP) vs. S&P 500 (SPY)
Market Cap
$39.69B
Dividend Yield1.65%
Average Volume (3M)1.70M
Price to Earnings (P/E)31.7
Beta (1Y)0.95
Revenue Growth6.45%
EPS Growth56.33%
CountryUS
Employees3,370
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)5.75
Shares Outstanding218,106,770
10 Day Avg. Volume2,132,378
30 Day Avg. Volume1,696,568
Financial Highlights & Ratios
PEG Ratio0.56
Price to Book (P/B)N/A
Price to Sales (P/S)2.42
Price to Cash Flow (P/CF)7.50
P/FCF Ratio16.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$221.64Price Target Upside21.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Targa Resources Business Overview & Revenue Model
Company DescriptionTarga Resources Corp. (TRGP) is a leading provider of midstream natural gas and natural gas liquids (NGL) services in the United States. The company operates in the energy sector, focusing on gathering, compressing, treating, processing, and selling natural gas and NGLs. Targa Resources offers its services across various segments, including Natural Gas Gathering and Processing, and Logistics and Transportation, serving a diverse range of customers, including producers and consumers of natural gas and NGL products.
How the Company Makes MoneyTarga Resources generates revenue primarily through its midstream services, which include gathering, processing, storing, and transporting natural gas and NGLs. The company's revenue model is largely fee-based, earning stable income by charging fees for the use of its infrastructure and services. Key revenue streams include fees from gathering and processing natural gas, fractionating NGLs into component products, and transporting these products to various markets. Targa also benefits from commodity-based margins related to the sale of NGLs and natural gas. Strategic partnerships and long-term contracts with upstream producers and downstream consumers help stabilize and enhance its earnings by securing volume commitments and providing predictable cash flows.
Targa Resources Financial Statement Overview
Summary
Targa Resources has demonstrated strong revenue growth and operational efficiency, with a solid EBIT margin. However, a high debt-to-equity ratio and fluctuating net profit margins indicate potential financial risks. Strong cash flows from operations and efficient capital expenditure management bolster financial stability.Income Statement
Targa Resources has shown consistent revenue growth from 2019 to 2024. The gross profit margin has improved significantly from earlier years, and the company maintained a strong EBIT margin, indicating operational efficiency. However, the net profit margin has fluctuated, pointing to some variability in overall profitability.75
Positive
Balance Sheet
The debt-to-equity ratio is relatively high, suggesting a heavy reliance on debt financing, which could pose risks in volatile markets. However, the company's return on equity (ROE) has improved over the years, indicating efficient use of shareholders' equity to generate profits. The equity ratio has declined, reflecting increased leverage.60
Neutral
Cash Flow
Cash flow from operations has been strong, with significant growth in free cash flow in recent years, indicating robust financial health. The company has effectively managed its capital expenditures, leading to positive free cash flow. The operating cash flow to net income ratio suggests good cash conversion efficiency.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 16.38B | 16.06B | 20.93B | 16.95B | 8.26B | Gross Profit |
| 4.26B | 4.05B | 2.95B | 2.35B | 2.29B | EBIT |
| 2.70B | 2.63B | 1.73B | 1.29B | 3.81B | EBITDA |
| 4.13B | 3.97B | 2.83B | 1.70B | -313.10M | Net Income Common Stockholders |
| 1.28B | 1.35B | 896.80M | 422.10M | -1.32B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 157.30M | 141.70M | 219.00M | 158.50M | 242.80M | Total Assets |
| 22.73B | 20.67B | 19.56B | 15.21B | 15.88B | Total Debt |
| 14.17B | 13.01B | 11.56B | 6.63B | 7.80B | Net Debt |
| 14.02B | 12.87B | 11.35B | 6.47B | 7.56B | Total Liabilities |
| 18.32B | 16.06B | 14.58B | 9.28B | 9.67B | Stockholders Equity |
| 2.59B | 2.74B | 2.67B | 2.76B | 2.96B |
| Cash Flow | Free Cash Flow | |||
| 683.90M | 826.20M | 1.05B | 1.80B | 792.90M | Operating Cash Flow |
| 3.65B | 3.21B | 2.38B | 2.30B | 1.74B | Investing Cash Flow |
| -3.02B | -2.40B | -4.15B | -473.20M | -738.10M | Financing Cash Flow |
| -612.80M | -888.10M | 1.83B | -1.91B | -1.09B |
Targa Resources Technical Analysis
Negative
181.91
Price Trends
196.92
Negative
189.47
Negative
162.20
Positive
Market Momentum
-3.77
Positive
34.69
Neutral
13.79
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRGP, the sentiment is Negative. The current price of 181.91 is below the 20-day moving average (MA) of 198.57, below the 50-day MA of 196.92, and above the 200-day MA of 162.20, indicating a neutral trend. The MACD of -3.77 indicates Positive momentum. The RSI at 34.69 is Neutral, neither overbought nor oversold. The STOCH value of 13.79 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TRGP.
Targa Resources Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $53.50B | 12.43 | 31.78% | 6.91% | 4.30% | 10.45% | |
77 Outperform | $70.93B | 12.29 | 20.78% | 6.41% | 12.71% | 6.74% | |
72 Outperform | $39.69B | 31.72 | 47.62% | 1.65% | 6.45% | 56.33% | |
71 Outperform | $66.59B | 30.06 | 17.92% | 3.48% | 8.06% | -30.11% | |
68 Neutral | $58.46B | 22.48 | 8.54% | 4.37% | -0.55% | 10.02% | |
64 Neutral | $56.03B | 17.35 | 18.11% | 4.46% | 24.16% | -6.58% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
TRGP
Targa Resources
181.91
79.40
77.46%
EPD
Enterprise Products Partners
33.46
7.20
27.42%
KMI
Kinder Morgan
26.14
9.06
53.04%
OKE
Oneok
89.57
15.69
21.24%
WMB
Williams Co
54.38
18.85
53.05%
MPLX
MPLX
52.70
15.20
40.53%
Targa Resources Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -13.50% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong positive sentiment with record-breaking financial results and significant growth in key operational areas. The announcement of new projects and increased shareholder returns further emphasized the company's positive outlook. However, there were some challenges related to commodity prices and weather impacts that were noted.Highlights
Record-Breaking Financial Performance
Targa Resources reported a record adjusted EBITDA of $4.1 billion for 2024, which is a 17% increase over 2023, driven by strong financial and operational metrics despite weak commodity prices.
Significant Growth in Permian Volumes
Permian GMP volumes grew by 14% year-over-year in 2024, exceeding expectations due to increased producer activity and performance, higher gas-to-oil ratios, and commercial success.
Successful Commercial Projects and Expansions
Targa announced three new projects: the Delaware Express pipeline, Train 12 fractionator, and an LPG export expansion at Galena Park, supporting continued growth and increased capacity.
Increased Shareholder Returns
Over a 50% increase in the common dividend for 2024 compared to 2023, along with a record $755 million in common share repurchases, demonstrating strong capital return to shareholders.
Positive Outlook for 2025 and Beyond
Estimated adjusted EBITDA for 2025 is between $4.65 billion and $4.85 billion, indicating a 15% increase over 2024, with strong volume growth expected in 2026 from new plants coming online.
Lowlights
Impact of Weak Commodity Prices
Despite strong performance, Targa faced challenges from weak natural gas and NGL prices, which could impact future profitability if prices remain low.
Weather-Related Volume Headwinds
Weather conditions impacted Permian volumes and NGL volumes downstream, particularly in the early part of 2025, posing a potential risk to achieving growth targets.
Increased CapEx and Cost Pressures
Capital expenditures are expected to be higher in the coming years due to accelerated project spending and potential cost increases from factors like steel tariffs.
Company Guidance
During the Targa Resources Corp. Fourth Quarter 2024 Earnings Conference Call, the company provided optimistic guidance for 2025 and beyond, driven by significant growth in their Permian operations. In 2024, Targa achieved record adjusted EBITDA of $4.1 billion, a 17% increase from 2023, and anticipates over $600 million in EBITDA growth for 2025. The company's capital expenditures are expected to range between $2.6 billion to $2.8 billion for 2025, with significant investments in new projects, including the Delaware Express pipeline and new fractionators. Targa also plans to recommend a 33% increase in their annualized 2025 common dividend per share, building on a 50% increase in 2024 dividends and $755 million in share repurchases. They expect to maintain a leverage ratio within their target range of 3 to 4 times, supported by a strong balance sheet. With projected Permian GMP volume growth and strategic infrastructure expansions, Targa is positioned to deliver continued shareholder value and operational success in the coming years.Targa Resources Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Targa Resources Announces $2 Billion Senior Notes Offering
Positive
Feb 25, 2025
On February 24, 2025, Targa Resources Corp. announced the pricing of a $2.0 billion public offering of senior notes, consisting of $1.0 billion in 5.550% Senior Notes due 2035 and $1.0 billion in 6.125% Senior Notes due 2055. The proceeds from this offering are intended to fund the repurchase of outstanding preferred equity in Targa Badlands LLC for approximately $1.8 billion and for general corporate purposes, including debt repayment and capital expenditures. This strategic financial move is expected to enhance Targa’s operational flexibility and strengthen its market position.
Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Targa Resources Reports Record 2024 Financial Results
Positive
Feb 20, 2025
Targa Resources Corp. reported record financial results for the fourth quarter and full year 2024, with significant increases in adjusted EBITDA and volumes across its Permian assets. The company announced several growth initiatives, including new plants and expansions in the Delaware and Mont Belvieu areas, and a refinancing move expected to reduce costs. Looking forward to 2025, Targa forecasts further growth in volumes and adjusted EBITDA, alongside increased capital expenditures to support infrastructure expansion, with plans to raise its dividend and continue share repurchases.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.