Targa Resources (TRGP) AI Stock Analysis

• Market Cap: $37.78B
• Dividend Yield: 1.73%
• Average Volume (3M): 2.33M
• Price to Earnings (P/E): 30.3
• Beta (1Y): 1.12
• Revenue Growth: 6.45%
• EPS Growth: 56.33%
• Country: US
• Employees: 3,370
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Midstream
• EPS (TTM): 5.75
• Shares Outstanding: 217,585,330
• 10 Day Avg. Volume: 3,266,502
• 30 Day Avg. Volume: 2,334,521
• PEG Ratio: 0.54
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.63
• Price to Cash Flow (P/CF): 8.10
• P/FCF Ratio: 17.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $223.47
• Price Target Upside: 36.63% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

Targa Resources demonstrates strong operational performance and growth prospects, particularly in the Permian operations. However, high leverage and a lofty valuation pose risks. Positive corporate events and earnings call sentiments bolster the outlook, but market volatility and cost pressures remain challenges.

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.

Cost Management

The refinancing of the preference shares is viewed positively, generating significant interest savings.

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

Cash Flow

Free cash flow after dividends was negative for both the quarter and the year due to higher capital expenditures.

Financial Performance

The adjusted EBITDA guidance for Targa Resources Corp. is below the consensus expectation.

Leverage

Repurchase of Badlands preferred equity is expected to increase leverage to 3.3x.

Targa Resources Business Overview & Revenue Model

Company Description

Targa Resources Corp., together with its subsidiary, Targa Resources Partners LP, owns, operates, acquires, and develops a portfolio of midstream energy assets in North America. The company operates in two segments, Gathering and Processing, and Logistics and Transportation. It engages in gathering, compressing, treating, processing, transporting, and selling natural gas; storing, fractionating, treating, transporting, and selling natural gas liquids (NGL) and NGL products, including services to liquefied petroleum gas exporters; and gathering, storing, terminaling, purchasing, and selling crude oil. The company is also involved in the purchase and resale of NGL products; and wholesale of propane, as well as provision of related logistics services to multi-state retailers, independent retailers, and other end-users. In addition, it offers NGL balancing services; and transportation services to refineries and petrochemical companies in the Gulf Coast area, as well as purchases, markets, and resells natural gas. The company operates approximately 28,400 miles of natural gas pipelines, including 42 owned and operated processing plants; and owns or operates a total of 34 storage wells with a gross storage capacity of approximately 76 million barrels. As of December 31, 2021, it leased and managed approximately 648 railcars; 119 transport tractors; and two company-owned pressurized NGL barges. The company was incorporated in 2005 and is headquartered in Houston, Texas.

How the Company Makes Money

Targa 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 demonstrates strong revenue growth and efficient operations with a solid cash flow position. However, high leverage due to a high debt-to-equity ratio remains a concern.

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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 163.56
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 163.56 is below the 20-day moving average (MA) of 189.98, below the 50-day MA of 194.13, and below the 200-day MA of 170.75, indicating a bearish trend. The MACD of 1.78 indicates Negative momentum. The RSI at 56.72 is Neutral, neither overbought nor oversold. The STOCH value of 46.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TRGP.

Targa Resources Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MPLX	85 Outperform	$49.36B	11.47	31.78%	7.48%	4.30%	10.45%
ET	77 Outperform	$57.20B	12.98	13.40%	8.08%	5.20%	18.35%
KMI	71 Outperform	$58.33B	22.43	8.54%	4.38%	-0.55%	10.02%
TRGP	69 Neutral	$37.78B	30.27	47.62%	1.73%	6.45%	56.33%
PAGP	68 Neutral	$13.71B	33.93	7.11%	7.51%	3.28%	-48.50%
OKE	66 Neutral	$53.01B	16.40	18.11%	4.92%	24.16%	-6.58%
Sector *	57 Neutral	$7.72B	4.32	-3.75%	6.33%	-0.11%	-64.75%

Targa Resources Corporate Events

Targa Resources Announces $2 Billion Senior Notes Offering

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.

Targa Resources Reports Record 2024 Financial Results

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.