TARGA RESOURCES CORP (TRGP) Stock Fundamental Analysis
NYSE:TRGP - New York Stock Exchange, Inc. - US87612G1013 - Common Stock - Currency: USD
We assign a fundamental rating of 3 out of 10 to TRGP. TRGP was compared to 211 industry peers in the Oil, Gas & Consumable Fuels industry. There are concerns on the financial health of TRGP while its profitability can be described as average. TRGP is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year TRGP was profitable.
In the past year TRGP had a positive cash flow from operations.
In multiple years TRGP reported negative net income over the last 5 years.
Of the past 5 years TRGP 4 years had a positive operating cash flow.
1.2 Ratios
TRGP's Return On Assets of 5.62% is in line compared to the rest of the industry. TRGP outperforms 53.43% of its industry peers.
The Return On Equity of TRGP (47.84%) is better than 93.63% of its industry peers.
TRGP's Return On Invested Capital of 11.83% is fine compared to the rest of the industry. TRGP outperforms 74.02% of its industry peers.
TRGP had an Average Return On Invested Capital over the past 3 years of 10.24%. This is significantly below the industry average of 28.75%.
The 3 year average ROIC (10.24%) for TRGP is below the current ROIC(11.83%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.62% | ||
| ROE | 47.84% | ||
| ROIC | 11.83% |
ROA(3y)2.83%
ROA(5y)-0.78%
ROE(3y)21.1%
ROE(5y)-0.03%
ROIC(3y)10.24%
ROIC(5y)8.2%
1.3 Margins
TRGP's Profit Margin of 7.59% is in line compared to the rest of the industry. TRGP outperforms 41.18% of its industry peers.
TRGP's Operating Margin of 16.22% is in line compared to the rest of the industry. TRGP outperforms 46.57% of its industry peers.
In the last couple of years the Operating Margin of TRGP has grown nicely.
With a Gross Margin value of 34.14%, TRGP perfoms like the industry average, outperforming 41.67% of the companies in the same industry.
In the last couple of years the Gross Margin of TRGP has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.22% | ||
| PM (TTM) | 7.59% | ||
| GM | 34.14% |
OM growth 3Y2.53%
OM growth 5Y30.79%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-4.26%
GM growth 5Y9.37%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), TRGP is creating some value.
TRGP has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
TRGP has an Altman-Z score of 2.55. This is not the best score and indicates that TRGP is in the grey zone with still only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.55, TRGP is in the better half of the industry, outperforming 71.08% of the companies in the same industry.
TRGP has a debt to FCF ratio of 44.46. This is a negative value and a sign of low solvency as TRGP would need 44.46 years to pay back of all of its debts.
TRGP's Debt to FCF ratio of 44.46 is on the low side compared to the rest of the industry. TRGP is outperformed by 65.69% of its industry peers.
A Debt/Equity ratio of 5.28 is on the high side and indicates that TRGP has dependencies on debt financing.
The Debt to Equity ratio of TRGP (5.28) is worse than 93.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.28 | ||
| Debt/FCF | 44.46 | ||
| Altman-Z | 2.55 |
ROIC/WACC1.4
WACC8.46%
2.3 Liquidity
A Current Ratio of 0.77 indicates that TRGP may have some problems paying its short term obligations.
TRGP has a worse Current ratio (0.77) than 73.53% of its industry peers.
A Quick Ratio of 0.61 indicates that TRGP may have some problems paying its short term obligations.
With a Quick ratio value of 0.61, TRGP is not doing good in the industry: 77.45% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.61 |
3. Growth
3.1 Past
TRGP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 55.15%, which is quite impressive.
Measured over the past years, TRGP shows a very strong growth in Earnings Per Share. The EPS has been growing by 45.81% on average per year.
EPS 1Y (TTM)55.15%
EPS 3Y45.81%
EPS 5YN/A
EPS Q2Q%14.6%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%3.91%
3.2 Future
The Earnings Per Share is expected to grow by 15.19% on average over the next years. This is quite good.
Based on estimates for the next years, TRGP will show a small growth in Revenue. The Revenue will grow by 2.90% on average per year.
EPS Next Y42.52%
EPS Next 2Y29.34%
EPS Next 3Y21.47%
EPS Next 5Y15.19%
Revenue Next Year22.28%
Revenue Next 2Y10.46%
Revenue Next 3Y2.22%
Revenue Next 5Y2.9%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 34.91, TRGP can be considered very expensive at the moment.
Based on the Price/Earnings ratio, TRGP is valued a bit more expensive than 69.12% of the companies in the same industry.
When comparing the Price/Earnings ratio of TRGP to the average of the S&P500 Index (29.63), we can say TRGP is valued inline with the index average.
A Price/Forward Earnings ratio of 24.51 indicates a rather expensive valuation of TRGP.
64.22% of the companies in the same industry are cheaper than TRGP, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.68, TRGP is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.91 | ||
| Fwd PE | 24.51 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TRGP is valued a bit more expensive than the industry average as 68.63% of the companies are valued more cheaply.
TRGP's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. TRGP is more expensive than 65.20% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 136.28 | ||
| EV/EBITDA | 14.63 |
4.3 Compensation for Growth
TRGP's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
TRGP's earnings are expected to grow with 21.47% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.82
PEG (5Y)N/A
EPS Next 2Y29.34%
EPS Next 3Y21.47%
5. Dividend
5.1 Amount
TRGP has a Yearly Dividend Yield of 1.47%. Purely for dividend investing, there may be better candidates out there.
TRGP's Dividend Yield is slightly below the industry average, which is at 6.75.
Compared to the average S&P500 Dividend Yield of 2.29, TRGP is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.47% |
5.2 History
The dividend of TRGP decreases each year by -14.16%.
TRGP has paid a dividend for at least 10 years, which is a reliable track record.
TRGP has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-14.16%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
TRGP pays out 45.73% of its income as dividend. This is a bit on the high side, but may be sustainable.
DP45.73%
EPS Next 2Y29.34%
EPS Next 3Y21.47%
200.36
-4.34 (-2.12%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryOil, Gas & Consumable Fuels
Earnings (Last)
Earnings (Next)
Inst Owners92.56%
Inst Owner Change1.71%
Ins Owners1.48%
Ins Owner Change5.93%
Market Cap43.69B
Analysts83.45
Price Target216.48 (8.05%)
Short Float %1.73%
Short Ratio2.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.47% |
Yearly Dividend1.91
Dividend Growth(5Y)-14.16%
DP45.73%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.33%
Min EPS beat(2)2.65%
Max EPS beat(2)10.02%
EPS beat(4)2
Avg EPS beat(4)-2.79%
Min EPS beat(4)-15.84%
Max EPS beat(4)10.02%
EPS beat(8)3
Avg EPS beat(8)-14.63%
EPS beat(12)4
Avg EPS beat(12)-19.66%
EPS beat(16)6
Avg EPS beat(16)-9.84%
Revenue beat(2)0
Avg Revenue beat(2)-14.46%
Min Revenue beat(2)-21.94%
Max Revenue beat(2)-6.98%
Revenue beat(4)2
Avg Revenue beat(4)-4.21%
Min Revenue beat(4)-21.94%
Max Revenue beat(4)7.96%
Revenue beat(8)2
Avg Revenue beat(8)-12.35%
Revenue beat(12)4
Avg Revenue beat(12)-8.4%
Revenue beat(16)8
Avg Revenue beat(16)-0.26%
PT rev (1m)3.05%
PT rev (3m)29.41%
EPS NQ rev (1m)1.29%
EPS NQ rev (3m)3.25%
EPS NY rev (1m)1.77%
EPS NY rev (3m)3.67%
Revenue NQ rev (1m)-3.51%
Revenue NQ rev (3m)4.15%
Revenue NY rev (1m)-1.45%
Revenue NY rev (3m)-1.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.91 | ||
| Fwd PE | 24.51 | ||
| P/S | 2.69 | ||
| P/FCF | 136.28 | ||
| P/OCF | 13.32 | ||
| P/B | 16.97 | ||
| P/tB | 86.83 | ||
| EV/EBITDA | 14.63 |
EPS(TTM)5.74
EY2.86%
EPS(NY)8.17
Fwd EY4.08%
FCF(TTM)1.47
FCFY0.73%
OCF(TTM)15.04
OCFY7.51%
SpS74.36
BVpS11.8
TBVpS2.31
PEG (NY)0.82
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.62% | ||
| ROE | 47.84% | ||
| ROCE | 13.64% | ||
| ROIC | 11.83% | ||
| ROICexc | 11.91% | ||
| ROICexgc | 13.35% | ||
| OM | 16.22% | ||
| PM (TTM) | 7.59% | ||
| GM | 34.14% | ||
| FCFM | 1.98% |
ROA(3y)2.83%
ROA(5y)-0.78%
ROE(3y)21.1%
ROE(5y)-0.03%
ROIC(3y)10.24%
ROIC(5y)8.2%
ROICexc(3y)10.35%
ROICexc(5y)8.31%
ROICexgc(3y)11.95%
ROICexgc(5y)9.51%
ROCE(3y)11.81%
ROCE(5y)9.46%
ROICexcg growth 3Y19.21%
ROICexcg growth 5Y35.27%
ROICexc growth 3Y17.79%
ROICexc growth 5Y35.62%
OM growth 3Y2.53%
OM growth 5Y30.79%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-4.26%
GM growth 5Y9.37%
F-Score6
Asset Turnover0.74
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.28 | ||
| Debt/FCF | 44.46 | ||
| Debt/EBITDA | 3.39 | ||
| Cap/Depr | 213.5% | ||
| Cap/Sales | 18.25% | ||
| Interest Coverage | 3.56 | ||
| Cash Conversion | 81.66% | ||
| Profit Quality | 26.04% | ||
| Current Ratio | 0.77 | ||
| Quick Ratio | 0.61 | ||
| Altman-Z | 2.55 |
F-Score6
WACC8.46%
ROIC/WACC1.4
Cap/Depr(3y)125.96%
Cap/Depr(5y)156.82%
Cap/Sales(3y)8.4%
Cap/Sales(5y)13.98%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)55.15%
EPS 3Y45.81%
EPS 5YN/A
EPS Q2Q%14.6%
EPS Next Y42.52%
EPS Next 2Y29.34%
EPS Next 3Y21.47%
EPS Next 5Y15.19%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%3.91%
Revenue Next Year22.28%
Revenue Next 2Y10.46%
Revenue Next 3Y2.22%
Revenue Next 5Y2.9%
EBIT growth 1Y3.45%
EBIT growth 3Y27.98%
EBIT growth 5Y42.43%
EBIT Next Year64.43%
EBIT Next 3Y26.34%
EBIT Next 5Y17.25%
FCF growth 1Y-72%
FCF growth 3Y1.38%
FCF growth 5YN/A
OCF growth 1Y39.71%
OCF growth 3Y22.56%
OCF growth 5Y22.93%