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Targa Resources (TRGP)
NYSE:TRGP
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Targa Resources
(NYSE:TRGP)
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Rating:69Neutral
Price Target:
$186.00
â–²(6.78% Upside)
Targa Resources' overall stock score is driven by strong earnings call performance and solid technical indicators. While financial performance shows profitability, high leverage and declining free cash flow growth are concerns. Valuation is moderate, with a reasonable P/E ratio and dividend yield. The positive operational momentum and strategic capital allocation are significant strengths.
Positive Factors
Revenue Growth
Consistent revenue growth indicates a stable demand for Targa's services and products, supporting long-term business sustainability and market position.
Operational Efficiency
Strong EBIT and EBITDA margins highlight Targa's ability to manage costs effectively, ensuring profitability and competitive advantage in the industry.
Strategic Capital Allocation
Strategic share repurchases demonstrate effective capital allocation, enhancing shareholder value and reflecting confidence in future business prospects.
Negative Factors
High Leverage
High leverage can limit financial flexibility and increase risk, potentially impacting Targa's ability to invest in growth opportunities or weather economic downturns.
Declining Free Cash Flow
Decreasing free cash flow growth may constrain Targa's ability to fund operations, invest in new projects, or return capital to shareholders, affecting long-term financial health.
Commodity Price Volatility
Volatility in commodity prices can impact revenue and profitability, posing a risk to Targa's earnings stability and necessitating effective risk management strategies.
Targa Resources (TRGP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$37.48B
Dividend Yield2.01%
Average Volume (3M)1.43M
Price to Earnings (P/E)24.6
Beta (1Y)0.85
Revenue Growth5.88%
EPS Growth46.35%
CountryUS
Employees3,370
SectorEnergy
Sector Strength52
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)2.90
Shares Outstanding215,191,850
10 Day Avg. Volume1,655,175
30 Day Avg. Volume1,430,929
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.46
Enterprise Value/Revenue3.16
Enterprise Value/Gross Profit15.17
Enterprise Value/Ebitda12.13
Forecast
1Y Price Target
$203.53Price Target Upside16.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
Targa Resources Business Overview & Revenue Model
Company DescriptionTarga 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 MoneyTarga Resources generates revenue primarily through its fee-based contracts and commodity sales. The Natural Gas segment earns income by processing natural gas and transporting it through its extensive pipeline network, charging fees for these services. The NGL segment generates revenue by fractionating NGLs and selling them on the market, where prices can fluctuate based on supply and demand. Additionally, Targa benefits from its strategic partnerships and joint ventures, which enhance its operational capabilities and market reach. Factors contributing to its earnings include the volume of natural gas processed and transported, prevailing market prices for natural gas and NGLs, and the overall demand for energy in the regions it serves.
Targa Resources Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong operational performance with record volumes and solid financial results, supported by strategic capital allocations like share repurchases. However, challenges such as commodity price volatility and operational impacts from planned maintenance were noted. Overall, positive growth momentum outstrips the issues faced.Q2-2025 Updates
Positive Updates
Record Permian Volumes
Permian volumes reached record levels with natural gas inlet volumes averaging 6.3 billion cubic feet per day, marking an 11% increase year-over-year.
NGL Transportation and Fractionation Records
NGL pipeline transportation volumes reached a record 961,000 barrels per day, and fractionation volumes averaged 969,000 barrels per day.
Strong Financial Performance
Reported adjusted EBITDA for Q2 was $1.163 billion, an 18% increase from the previous year.
Permian Gas Production Growth
Permian gas production has grown at a higher rate than crude production, with associated gas growth averaging 13% annually over the past five years.
Share Repurchases
The company repurchased $324 million in common shares during Q2 and announced a new $1 billion share repurchase program.
Negative Updates
Commodity Price Volatility
The company faced lower marketing margins and sequentially weaker commodity prices, impacting the financial outlook.
Impact of Planned Turnaround
Fractionation volumes were affected by a planned turnaround at the Mont Belvieu complex, reducing capacity for two-thirds of the second quarter.
Permian Rig Count Concerns
There is volatility in the broader Permian rig count, which has softened, although the number of rigs on Targa's system remained unchanged.
Company Guidance
During the second quarter of 2025, Targa Resources Corp. reported a strong financial performance and operational results, highlighted by record Permian and NGL transportation volumes. The company experienced a significant increase in gas volumes on its Permian system, adding approximately 270 million cubic feet per day during the quarter and an additional 250 million cubic feet per day in July. Targa's adjusted EBITDA for the quarter was $1.163 billion, an 18% increase from the previous year, driven by higher Permian volumes and a full ownership stake in the Badlands assets. The company maintained its 2025 adjusted EBITDA guidance range of $4.65 billion to $4.85 billion. Targa's net growth capital spending for 2025 is expected to be $3 billion, with a net maintenance capital spending estimate of $250 million. The company also executed $324 million in common share repurchases during the quarter and announced a new $1 billion share repurchase program, maintaining a focus on capital allocation strategies that support shareholder value.Targa Resources Financial Statement Overview
Summary
Targa Resources shows strong profitability and efficient operations with solid income statement metrics. However, high leverage and declining free cash flow growth present potential risks. The company needs to manage its debt levels carefully while maintaining operational efficiency.Income Statement
Targa Resources shows a solid performance in its income statement with a consistent revenue growth rate of 2.48% in the TTM period. The company maintains healthy gross and net profit margins at 22.34% and 9.70% respectively, indicating strong profitability. However, the gross profit margin has decreased from previous periods, and the revenue growth rate has slowed compared to earlier years. The EBIT and EBITDA margins are robust, reflecting efficient operations.75
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 6.51, indicating significant leverage, which could pose financial risks. However, the return on equity is impressive at 64.04%, showcasing effective use of equity to generate profits. The equity ratio is relatively low, suggesting a heavy reliance on debt financing.60
Neutral
Cash Flow
Cash flow analysis shows a decline in free cash flow growth by 33.15% in the TTM period, which is a concern. However, the operating cash flow to net income ratio is healthy at 1.16, indicating good cash generation relative to net income. The free cash flow to net income ratio is lower, reflecting reduced free cash flow relative to net income.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 17.29B | 16.63B | 15.62B | 21.68B | 17.44B | 8.27B |
| Gross Profit | 3.60B | 3.33B | 2.54B | 2.79B | 2.09B | 1.52B |
| EBITDA | 4.50B | 4.14B | 3.97B | 3.21B | 1.70B | -313.10M |
| Net Income | 1.52B | 1.27B | 828.20M | 1.14B | 71.20M | -1.55B |
Balance Sheet | ||||||
| Total Assets | 23.51B | 22.73B | 20.67B | 19.56B | 15.21B | 15.88B |
| Cash, Cash Equivalents and Short-Term Investments | 113.10M | 157.30M | 141.70M | 219.00M | 158.50M | 242.80M |
| Total Debt | 16.85B | 14.27B | 13.01B | 11.56B | 6.63B | 7.80B |
| Total Liabilities | 20.80B | 18.32B | 16.06B | 14.58B | 10.03B | 9.97B |
| Stockholders Equity | 2.59B | 2.59B | 2.74B | 2.67B | 2.01B | 2.65B |
Cash Flow | ||||||
| Free Cash Flow | 427.50M | 683.90M | 826.20M | 1.05B | 1.80B | 792.90M |
| Operating Cash Flow | 3.68B | 3.65B | 3.21B | 2.38B | 2.30B | 1.74B |
| Investing Cash Flow | -3.36B | -3.02B | -2.40B | -4.15B | -473.20M | -738.10M |
| Financing Cash Flow | -374.10M | -612.80M | -888.10M | 1.83B | -1.91B | -1.09B |
Targa Resources Technical Analysis
Positive
174.19
Price Trends
165.24
Positive
165.51
Positive
176.18
Negative
Market Momentum
1.83
Negative
62.64
Neutral
84.81
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRGP, the sentiment is Positive. The current price of 174.19 is above the 20-day moving average (MA) of 166.23, above the 50-day MA of 165.24, and below the 200-day MA of 176.18, indicating a neutral trend. The MACD of 1.83 indicates Negative momentum. The RSI at 62.64 is Neutral, neither overbought nor oversold. The STOCH value of 84.81 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TRGP.
Targa Resources Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $52.26B | 12.17 | 31.19% | 7.46% | 4.67% | 2.07% | |
74 Outperform | $68.49B | 11.82 | 20.20% | 6.77% | -0.55% | 2.14% | |
73 Outperform | $46.53B | 14.40 | 14.17% | 5.52% | 47.00% | 11.86% | |
73 Outperform | $2.43B | 15.41 | 401.61% | 9.74% | -12.08% | 1.44% | |
69 Neutral | $37.48B | 24.59 | 60.30% | 2.01% | 5.88% | 46.35% | |
69 Neutral | $52.40B | 13.90 | 57.39% | 0.84% | 11.20% | -8.80% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% |
* Energy Sector Average
TRGP
Targa Resources
174.19
29.08
20.04%
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EPD
Enterprise Products Partners
31.63
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Oneok
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DKL
Delek Logistics
45.50
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MPLX
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10.13
24.62%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.