TARGA RESOURCES CORP (TRGP) Stock Fundamental Analysis
NYSE:TRGP - New York Stock Exchange, Inc. - US87612G1013 - Common Stock - Currency: USD
TRGP gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 211 industry peers in the Oil, Gas & Consumable Fuels industry. While TRGP is still in line with the averages on profitability rating, there are concerns on its financial health. While showing a medium growth rate, TRGP is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
TRGP had positive earnings in the past year.
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.
Each year in the past 5 years TRGP had a positive operating cash flow.
1.2 Ratios
TRGP has a Return On Assets of 5.24%. This is in the better half of the industry: TRGP outperforms 61.14% of its industry peers.
With an excellent Return On Equity value of 48.76%, TRGP belongs to the best of the industry, outperforming 94.31% of the companies in the same industry.
The Return On Invested Capital of TRGP (10.70%) is better than 79.15% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for TRGP is significantly below the industry average of 23.70%.
The last Return On Invested Capital (10.70%) for TRGP is above the 3 year average (10.47%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.24% | ||
| ROE | 48.76% | ||
| ROIC | 10.7% |
ROA(3y)4.73%
ROA(5y)0.69%
ROE(3y)37.62%
ROE(5y)11.05%
ROIC(3y)10.47%
ROIC(5y)9.38%
1.3 Margins
TRGP has a Profit Margin of 7.30%. This is comparable to the rest of the industry: TRGP outperforms 49.29% of its industry peers.
TRGP has a Operating Margin (15.87%) which is in line with its industry peers.
TRGP's Operating Margin has improved in the last couple of years.
TRGP has a Gross Margin (34.42%) which is in line with its industry peers.
TRGP's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.87% | ||
| PM (TTM) | 7.3% | ||
| GM | 34.42% |
OM growth 3Y28.03%
OM growth 5Y22.99%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y22.2%
GM growth 5Y3.32%
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.
The number of shares outstanding for TRGP has been reduced compared to 1 year ago.
TRGP has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, TRGP has an improved debt to assets ratio.
2.2 Solvency
TRGP has an Altman-Z score of 2.23. 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.
TRGP's Altman-Z score of 2.23 is fine compared to the rest of the industry. TRGP outperforms 71.56% of its industry peers.
TRGP has a debt to FCF ratio of 25.35. This is a negative value and a sign of low solvency as TRGP would need 25.35 years to pay back of all of its debts.
TRGP's Debt to FCF ratio of 25.35 is in line compared to the rest of the industry. TRGP outperforms 44.08% of its industry peers.
A Debt/Equity ratio of 6.34 is on the high side and indicates that TRGP has dependencies on debt financing.
With a Debt to Equity ratio value of 6.34, TRGP is not doing good in the industry: 90.52% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.34 | ||
| Debt/FCF | 25.35 | ||
| Altman-Z | 2.23 |
ROIC/WACC1.28
WACC8.35%
2.3 Liquidity
TRGP has a Current Ratio of 0.65. This is a bad value and indicates that TRGP is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.65, TRGP is not doing good in the industry: 79.15% of the companies in the same industry are doing better.
TRGP has a Quick Ratio of 0.65. This is a bad value and indicates that TRGP is not financially healthy enough and could expect problems in meeting its short term obligations.
TRGP has a Quick ratio of 0.57. This is in the lower half of the industry: TRGP underperforms 76.30% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.65 | ||
| Quick Ratio | 0.57 |
3. Growth
3.1 Past
TRGP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.40%, which is quite good.
Measured over the past years, TRGP shows a very strong growth in Earnings Per Share. The EPS has been growing by 45.97% on average per year.
TRGP shows a small growth in Revenue. In the last year, the Revenue has grown by 1.73%.
The Revenue has been growing by 13.57% on average over the past years. This is quite good.
EPS 1Y (TTM)11.4%
EPS 3Y45.97%
EPS 5YN/A
EPS Q2Q%-25.41%
Revenue 1Y (TTM)1.73%
Revenue growth 3Y-1.13%
Revenue growth 5Y13.57%
Sales Q2Q%-0.02%
3.2 Future
The Earnings Per Share is expected to grow by 16.08% on average over the next years. This is quite good.
TRGP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.15% yearly.
EPS Next Y37.82%
EPS Next 2Y28.78%
EPS Next 3Y24.16%
EPS Next 5Y16.08%
Revenue Next Year25.29%
Revenue Next 2Y18.09%
Revenue Next 3Y10.19%
Revenue Next 5Y5.15%
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.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 32.00, the valuation of TRGP can be described as expensive.
Based on the Price/Earnings ratio, TRGP is valued a bit more expensive than 62.56% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.15. TRGP is around the same levels.
The Price/Forward Earnings ratio is 18.24, which indicates a rather expensive current valuation of TRGP.
The rest of the industry has a similar Price/Forward Earnings ratio as TRGP.
The average S&P500 Price/Forward Earnings ratio is at 21.60. TRGP is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32 | ||
| Fwd PE | 18.24 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TRGP indicates a slightly more expensive valuation: TRGP is more expensive than 60.19% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TRGP is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 59.05 | ||
| EV/EBITDA | 13.31 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
TRGP has a very decent profitability rating, which may justify a higher PE ratio.
TRGP's earnings are expected to grow with 24.16% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.85
PEG (5Y)N/A
EPS Next 2Y28.78%
EPS Next 3Y24.16%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.27%, TRGP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 6.66, TRGP has a dividend in line with its industry peers.
TRGP's Dividend Yield is comparable with the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.27% |
5.2 History
The dividend of TRGP decreases each year by -7.60%.
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)-7.6%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
TRGP pays out 55.72% of its income as dividend. This is a bit on the high side, but may be sustainable.
DP55.72%
EPS Next 2Y28.78%
EPS Next 3Y24.16%
174.08
-0.3 (-0.17%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryOil, Gas & Consumable Fuels
Earnings (Last)
Earnings (Next)
Inst Owners92.75%
Inst Owner Change-0.08%
Ins Owners1.43%
Ins Owner Change3.23%
Market Cap37.76B
Analysts85.71
Price Target208.23 (19.62%)
Short Float %2.26%
Short Ratio1.99
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.27% |
Yearly Dividend2.8
Dividend Growth(5Y)-7.6%
DP55.72%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-40.09%
Min EPS beat(2)-54.87%
Max EPS beat(2)-25.31%
EPS beat(4)2
Avg EPS beat(4)-16.88%
Min EPS beat(4)-54.87%
Max EPS beat(4)10.02%
EPS beat(8)3
Avg EPS beat(8)-12.23%
EPS beat(12)4
Avg EPS beat(12)-16.59%
EPS beat(16)5
Avg EPS beat(16)-21.22%
Revenue beat(2)0
Avg Revenue beat(2)-6.11%
Min Revenue beat(2)-8.72%
Max Revenue beat(2)-3.5%
Revenue beat(4)0
Avg Revenue beat(4)-10.28%
Min Revenue beat(4)-21.94%
Max Revenue beat(4)-3.5%
Revenue beat(8)2
Avg Revenue beat(8)-8.69%
Revenue beat(12)3
Avg Revenue beat(12)-11.04%
Revenue beat(16)6
Avg Revenue beat(16)-4.63%
PT rev (1m)-3.58%
PT rev (3m)-5.82%
EPS NQ rev (1m)-1.02%
EPS NQ rev (3m)1.54%
EPS NY rev (1m)-0.86%
EPS NY rev (3m)-2.98%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.44%
Revenue NY rev (1m)-1.64%
Revenue NY rev (3m)-2.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32 | ||
| Fwd PE | 18.24 | ||
| P/S | 2.31 | ||
| P/FCF | 59.05 | ||
| P/OCF | 10.13 | ||
| P/B | 15.4 | ||
| P/tB | 67.97 | ||
| EV/EBITDA | 13.31 |
EPS(TTM)5.44
EY3.12%
EPS(NY)9.54
Fwd EY5.48%
FCF(TTM)2.95
FCFY1.69%
OCF(TTM)17.18
OCFY9.87%
SpS75.51
BVpS11.3
TBVpS2.56
PEG (NY)0.85
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.24% | ||
| ROE | 48.76% | ||
| ROCE | 13.26% | ||
| ROIC | 10.7% | ||
| ROICexc | 10.79% | ||
| ROICexgc | 11.95% | ||
| OM | 15.87% | ||
| PM (TTM) | 7.3% | ||
| GM | 34.42% | ||
| FCFM | 3.9% |
ROA(3y)4.73%
ROA(5y)0.69%
ROE(3y)37.62%
ROE(5y)11.05%
ROIC(3y)10.47%
ROIC(5y)9.38%
ROICexc(3y)10.57%
ROICexc(5y)9.49%
ROICexgc(3y)12.22%
ROICexgc(5y)10.81%
ROCE(3y)12.98%
ROCE(5y)11.62%
ROICexcg growth 3Y10.65%
ROICexcg growth 5Y35.31%
ROICexc growth 3Y10.05%
ROICexc growth 5Y35.4%
OM growth 3Y28.03%
OM growth 5Y22.99%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y22.2%
GM growth 5Y3.32%
F-Score5
Asset Turnover0.72
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.34 | ||
| Debt/FCF | 25.35 | ||
| Debt/EBITDA | 3.84 | ||
| Cap/Depr | 212.97% | ||
| Cap/Sales | 18.85% | ||
| Interest Coverage | 3.31 | ||
| Cash Conversion | 92.06% | ||
| Profit Quality | 53.5% | ||
| Current Ratio | 0.65 | ||
| Quick Ratio | 0.57 | ||
| Altman-Z | 2.23 |
F-Score5
WACC8.35%
ROIC/WACC1.28
Cap/Depr(3y)176.1%
Cap/Depr(5y)139.26%
Cap/Sales(3y)13.44%
Cap/Sales(5y)10.96%
Profit Quality(3y)82.47%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)11.4%
EPS 3Y45.97%
EPS 5YN/A
EPS Q2Q%-25.41%
EPS Next Y37.82%
EPS Next 2Y28.78%
EPS Next 3Y24.16%
EPS Next 5Y16.08%
Revenue 1Y (TTM)1.73%
Revenue growth 3Y-1.13%
Revenue growth 5Y13.57%
Sales Q2Q%-0.02%
Revenue Next Year25.29%
Revenue Next 2Y18.09%
Revenue Next 3Y10.19%
Revenue Next 5Y5.15%
EBIT growth 1Y7.01%
EBIT growth 3Y26.58%
EBIT growth 5Y39.68%
EBIT Next Year73.27%
EBIT Next 3Y27.11%
EBIT Next 5Y17.42%
FCF growth 1Y-35.51%
FCF growth 3Y-27.54%
FCF growth 5YN/A
OCF growth 1Y33.02%
OCF growth 3Y16.59%
OCF growth 5Y21.3%