TARGA RESOURCES CORP (TRGP) Stock Fundamental Analysis
NYSE:TRGP - New York Stock Exchange, Inc. - US87612G1013 - Common Stock - Currency: USD
Taking everything into account, TRGP scores 5 out of 10 in our fundamental rating. TRGP was compared to 213 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 has a correct valuation and a medium growth rate.
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.
In the past 5 years TRGP always reported a positive cash flow from operatings.
1.2 Ratios
TRGP's Return On Assets of 5.24% is fine compared to the rest of the industry. TRGP outperforms 61.03% of its industry peers.
TRGP's Return On Equity of 48.76% is amongst the best of the industry. TRGP outperforms 94.37% of its industry peers.
TRGP has a Return On Invested Capital of 10.70%. This is in the better half of the industry: TRGP outperforms 78.87% 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 23.55%.
The 3 year average ROIC (10.47%) for TRGP is below the current ROIC(10.70%), indicating increased profibility in the last year.
| 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 (7.30%) which is comparable to the rest of the industry.
With a Operating Margin value of 15.87%, TRGP perfoms like the industry average, outperforming 47.42% of the companies in the same industry.
In the last couple of years the Operating Margin of TRGP has grown nicely.
TRGP's Gross Margin of 34.42% is in line compared to the rest of the industry. TRGP outperforms 44.60% of 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.
Compared to 1 year ago, TRGP has less shares outstanding
Compared to 5 years ago, TRGP has less shares outstanding
The debt/assets ratio for TRGP has been reduced compared to a year ago.
2.2 Solvency
TRGP has an Altman-Z score of 2.16. 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 2.16 is fine compared to the rest of the industry. TRGP outperforms 70.89% 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 43.66% 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.
The Debt to Equity ratio of TRGP (6.34) is worse than 90.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.34 | ||
| Debt/FCF | 25.35 | ||
| Altman-Z | 2.16 |
ROIC/WACC1.18
WACC9.05%
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.
TRGP has a worse Current ratio (0.65) than 78.87% of its industry peers.
A Quick Ratio of 0.57 indicates that TRGP may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.57, TRGP is doing worse than 76.06% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.65 | ||
| Quick Ratio | 0.57 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.40% over the past year.
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
TRGP is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.08% yearly.
The Revenue is expected to grow by 5.15% on average over the next years.
EPS Next Y39.02%
EPS Next 2Y29.56%
EPS Next 3Y25.12%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
TRGP is valuated quite expensively with a Price/Earnings ratio of 30.35.
61.50% of the companies in the same industry are cheaper than TRGP, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 26.59. TRGP is around the same levels.
A Price/Forward Earnings ratio of 17.10 indicates a rather expensive valuation of TRGP.
TRGP's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 22.39. TRGP is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.35 | ||
| Fwd PE | 17.1 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TRGP is valued a bit more expensive than the industry average as 60.09% of the companies are valued more cheaply.
TRGP's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 56.02 | ||
| EV/EBITDA | 12.69 |
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.
The decent profitability rating of TRGP may justify a higher PE ratio.
A more expensive valuation may be justified as TRGP's earnings are expected to grow with 25.12% in the coming years.
PEG (NY)0.78
PEG (5Y)N/A
EPS Next 2Y29.56%
EPS Next 3Y25.12%
5. Dividend
5.1 Amount
TRGP has a Yearly Dividend Yield of 2.44%.
Compared to an average industry Dividend Yield of 6.74, TRGP has a dividend in line with its industry peers.
TRGP's Dividend Yield is comparable with the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.44% |
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
55.72% of the earnings are spent on dividend by TRGP. This is a bit on the high side, but may be sustainable.
DP55.72%
EPS Next 2Y29.56%
EPS Next 3Y25.12%
165.13
+2.33 (+1.43%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryOil, Gas & Consumable Fuels
Earnings (Last)
Earnings (Next)
Inst Owners92.56%
Inst Owner Change-0.08%
Ins Owners1.58%
Ins Owner Change3.22%
Market Cap35.82B
Analysts85.71
Price Target208.02 (25.97%)
Short Float %2.2%
Short Ratio2
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.44% |
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)-3.68%
PT rev (3m)-3.91%
EPS NQ rev (1m)-2.34%
EPS NQ rev (3m)2.65%
EPS NY rev (1m)-3.63%
EPS NY rev (3m)-2.14%
Revenue NQ rev (1m)-1.81%
Revenue NQ rev (3m)-0.98%
Revenue NY rev (1m)-1.64%
Revenue NY rev (3m)2.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.35 | ||
| Fwd PE | 17.1 | ||
| P/S | 2.19 | ||
| P/FCF | 56.02 | ||
| P/OCF | 9.61 | ||
| P/B | 14.61 | ||
| P/tB | 64.47 | ||
| EV/EBITDA | 12.69 |
EPS(TTM)5.44
EY3.29%
EPS(NY)9.66
Fwd EY5.85%
FCF(TTM)2.95
FCFY1.79%
OCF(TTM)17.18
OCFY10.41%
SpS75.51
BVpS11.3
TBVpS2.56
PEG (NY)0.78
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 | 2.16 |
F-Score5
WACC9.05%
ROIC/WACC1.18
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 Y39.02%
EPS Next 2Y29.56%
EPS Next 3Y25.12%
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%