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Targa Resources Corp TRGP

Morningstar Rating
$114.69 −0.64 (0.55%)
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Company Report

Fee Floors Support Substantial Fair Value Estimate Increase for Targa

Targa Resources is primarily a gatherer and processor of natural gas. Seventy percent of its gathering and processing, or G&P, assets are in the Permian, which generates about 80% of its volumes. The firm has historically outgrown Permian production growth, given its leverage to growth-oriented customers and robust gas/oil ratios. It has aggressively made acquisitions, with Lucid in 2022 for $3.5 billion its biggest deal yet. To date, it has contributed to very healthy near-term growth. Fee floors provided protection for Targa downside for 10 out of 12 months in 2023, and we expect a similar outcome for 2024 given the delay in LNG projects and demand uplift.

Price vs Fair Value

TRGP is trading at a 16% premium.
Price
$114.69
Fair Value
$93.00
Uncertainty
Medium
1-Star Price
$478.66
5-Star Price
$84.10
Economic Moat
Xbzf
Capital Allocation
Ktzmsbb

Bulls Say, Bears Say

Bulls

Targa is leveraged to the high-growth Permian, and its Grand Prix pipeline has been an important growth engine.

Bears

G&P assets face a constant capital expenditures treadmill, given rapid well decline rates to maintain flows.

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News

Trading Information

Previous Close Price
$115.33
Day Range
$114.12117.61
52-Week Range
$67.36117.61
Bid/Ask
$111.74 / $115.00
Market Cap
$25.52 Bil
Volume/Avg
2.1 Mil / 1.8 Mil

Key Statistics

Price/Earnings (Normalized)
22.54
Price/Sales
1.61
Dividend Yield (Trailing)
1.75%
Dividend Yield (Forward)
1.75%
Total Yield
3.44%

Company Profile

Targa Resources is a midstream firm that primarily operates gathering and processing assets with substantial positions in the Permian, Stack, Scoop, and Bakken plays. It has fractionation capacity at Mont Belvieu and operates a liquefied petroleum gas export terminal. The Grand Prix natural gas liquids pipeline is another important asset.
Sector
Energy
Industry
Oil & Gas Midstream
Stock Style Box
Mid Core
Total Number of Employees
3,186

Competitors

Valuation

Metric
TRGP
ET
PAA
Price/Earnings (Normalized)
22.5412.7112.67
Price/Book Value
9.321.761.56
Price/Sales
1.610.640.26
Price/Cash Flow
8.445.015.00
Price/Earnings
TRGP
ET
PAA

Financial Strength

Metric
TRGP
ET
PAA
Quick Ratio
0.580.830.84
Current Ratio
0.791.100.98
Interest Coverage
3.823.175.20
Quick Ratio
TRGP
ET
PAA

Profitability

Metric
TRGP
ET
PAA
Return on Assets (Normalized)
7.11%5.62%3.63%
Return on Equity (Normalized)
53.57%21.72%12.48%
Return on Invested Capital (Normalized)
11.56%9.25%6.19%
Return on Assets
TRGP
ET
PAA
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