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 5 out of 10. The analysis compared the fundamentals against 209 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. TRGP has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year TRGP was profitable.
TRGP had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: TRGP reported negative net income in multiple years.
Each year in the past 5 years TRGP had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 5.24%, TRGP is doing good in the industry, outperforming 62.20% of the companies in the same industry.
Looking at the Return On Equity, with a value of 48.76%, TRGP belongs to the top of the industry, outperforming 94.74% of the companies in the same industry.
The Return On Invested Capital of TRGP (10.70%) is better than 80.86% of its industry peers.
TRGP had an Average Return On Invested Capital over the past 3 years of 10.47%. This is significantly below the industry average of 23.52%.
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 (7.30%) which is comparable to the rest of the industry.
TRGP's Operating Margin of 15.87% is in line compared to the rest of the industry. TRGP outperforms 47.85% of its industry peers.
TRGP's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 34.42%, TRGP is in line with its industry, outperforming 45.45% 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 | 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
The number of shares outstanding for TRGP has been reduced compared to 5 years ago.
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.
The Altman-Z score of TRGP (2.16) is better than 72.25% 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 has a Debt to FCF ratio of 25.35. This is comparable to the rest of the industry: TRGP outperforms 43.06% 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.
TRGP's Debt to Equity ratio of 6.34 is on the low side compared to the rest of the industry. TRGP is outperformed by 89.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.34 | ||
| Debt/FCF | 25.35 | ||
| Altman-Z | 2.16 |
ROIC/WACC1.24
WACC8.65%
2.3 Liquidity
A Current Ratio of 0.65 indicates that TRGP may have some problems paying its short term obligations.
TRGP's Current ratio of 0.65 is on the low side compared to the rest of the industry. TRGP is outperformed by 77.99% of its industry peers.
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.
The Quick ratio of TRGP (0.57) is worse than 75.60% of its industry peers.
| 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 impressive 46.21% over the past year.
TRGP shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 45.97% yearly.
The Revenue has been growing slightly by 2.00% in the past year.
TRGP shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.57% yearly.
EPS 1Y (TTM)46.21%
EPS 3Y45.97%
EPS 5YN/A
EPS Q2Q%115.79%
Revenue 1Y (TTM)2%
Revenue growth 3Y-1.13%
Revenue growth 5Y13.57%
Sales Q2Q%19.6%
3.2 Future
The Earnings Per Share is expected to grow by 16.08% on average over the next years. This is quite good.
The Revenue is expected to grow by 5.52% on average over the next years.
EPS Next Y34.92%
EPS Next 2Y29.52%
EPS Next 3Y24.94%
EPS Next 5Y16.08%
Revenue Next Year22.88%
Revenue Next 2Y16.77%
Revenue Next 3Y12.96%
Revenue Next 5Y5.52%
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
Based on the Price/Earnings ratio of 23.38, the valuation of TRGP can be described as rather expensive.
TRGP's Price/Earnings is on the same level as the industry average.
TRGP is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.87, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 16.91, TRGP is valued correctly.
The rest of the industry has a similar Price/Forward Earnings ratio as TRGP.
When comparing the Price/Forward Earnings ratio of TRGP to the average of the S&P500 Index (35.34), we can say TRGP is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.38 | ||
| Fwd PE | 16.91 |
4.2 Price Multiples
TRGP's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. TRGP is more expensive than 61.72% of the companies 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 | 55.36 | ||
| EV/EBITDA | 12.71 |
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 24.94% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.67
PEG (5Y)N/A
EPS Next 2Y29.52%
EPS Next 3Y24.94%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.42%, TRGP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 6.29, TRGP has a dividend in line with its industry peers.
TRGP's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
5.2 History
The dividend of TRGP decreases each year by -7.60%.
TRGP has been paying a dividend for at least 10 years, so it has 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 2Y29.52%
EPS Next 3Y24.94%
163.19
-2.32 (-1.4%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryOil, Gas & Consumable Fuels
Earnings (Last)
Earnings (Next)
Inst Owners92.5%
Inst Owner Change-1.77%
Ins Owners1.43%
Ins Owner Change-4.74%
Market Cap35.40B
Analysts84.83
Price Target208.89 (28%)
Short Float %1.97%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.42% |
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)0.31%
PT rev (3m)-3.28%
EPS NQ rev (1m)-0.49%
EPS NQ rev (3m)-2.31%
EPS NY rev (1m)0%
EPS NY rev (3m)-6.47%
Revenue NQ rev (1m)1.42%
Revenue NQ rev (3m)0.18%
Revenue NY rev (1m)-0.89%
Revenue NY rev (3m)-3.52%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.38 | ||
| Fwd PE | 16.91 | ||
| P/S | 2.16 | ||
| P/FCF | 55.36 | ||
| P/OCF | 9.5 | ||
| P/B | 14.44 | ||
| P/tB | 63.72 | ||
| EV/EBITDA | 12.71 |
EPS(TTM)6.98
EY4.28%
EPS(NY)9.65
Fwd EY5.91%
FCF(TTM)2.95
FCFY1.81%
OCF(TTM)17.18
OCFY10.53%
SpS75.51
BVpS11.3
TBVpS2.56
PEG (NY)0.67
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
WACC8.65%
ROIC/WACC1.24
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)46.21%
EPS 3Y45.97%
EPS 5YN/A
EPS Q2Q%115.79%
EPS Next Y34.92%
EPS Next 2Y29.52%
EPS Next 3Y24.94%
EPS Next 5Y16.08%
Revenue 1Y (TTM)2%
Revenue growth 3Y-1.13%
Revenue growth 5Y13.57%
Sales Q2Q%19.6%
Revenue Next Year22.88%
Revenue Next 2Y16.77%
Revenue Next 3Y12.96%
Revenue Next 5Y5.52%
EBIT growth 1Y7.01%
EBIT growth 3Y26.58%
EBIT growth 5Y39.68%
EBIT Next Year73.59%
EBIT Next 3Y27.5%
EBIT Next 5Y17.43%
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%