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 213 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
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
With a decent Return On Assets value of 5.24%, TRGP is doing good in the industry, outperforming 60.56% of the companies in the same industry.
With an excellent Return On Equity value of 48.76%, TRGP belongs to the best of the industry, outperforming 94.37% of the companies in the same industry.
TRGP has a Return On Invested Capital of 10.70%. This is in the better half of the industry: TRGP outperforms 76.06% of its industry peers.
The Average Return On Invested Capital over the past 3 years for TRGP is significantly below the industry average of 25.88%.
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 in line with its industry peers.
The Operating Margin of TRGP (15.87%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of TRGP has grown nicely.
TRGP has a Gross Margin (34.42%) which is in line with its industry peers.
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
TRGP has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it 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.
Compared to 1 year ago, TRGP has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.15 indicates that TRGP is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.15, TRGP is in the better half of the industry, outperforming 73.24% of the companies in the same industry.
The Debt to FCF ratio of TRGP is 25.35, which is on the high side as it means it would take TRGP, 25.35 years of fcf income to pay off all of its debts.
TRGP has a Debt to FCF ratio (25.35) which is in line with its industry peers.
A Debt/Equity ratio of 6.34 is on the high side and indicates that TRGP has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 6.34, TRGP is doing worse than 91.08% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 6.34 | ||
| Debt/FCF | 25.35 | ||
| Altman-Z | 2.15 |
ROIC/WACC1.07
WACC9.99%
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's Current ratio of 0.65 is on the low side compared to the rest of the industry. TRGP is outperformed by 77.93% of its industry peers.
A Quick Ratio of 0.57 indicates that TRGP may have some problems paying its short term obligations.
With a Quick ratio value of 0.57, TRGP is not doing good in the industry: 75.59% of the companies in the same industry are doing better.
| 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.
The Earnings Per Share has been growing by 45.97% on average over the past years. This is a very strong growth
Looking at the last year, TRGP shows a small growth in Revenue. The Revenue has grown by 1.73% in the last year.
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 17.63% yearly.
Based on estimates for the next years, TRGP will show a small growth in Revenue. The Revenue will grow by 2.98% on average per year.
EPS Next Y39.02%
EPS Next 2Y29.56%
EPS Next 3Y25.12%
EPS Next 5Y17.63%
Revenue Next Year27.37%
Revenue Next 2Y18.05%
Revenue Next 3Y10.31%
Revenue Next 5Y2.98%
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
With a Price/Earnings ratio of 29.48, TRGP can be considered very expensive at the moment.
62.44% 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 26.03. TRGP is around the same levels.
Based on the Price/Forward Earnings ratio of 16.60, the valuation of TRGP can be described as correct.
TRGP's Price/Forward Earnings ratio is in line with the industry average.
When comparing the Price/Forward Earnings ratio of TRGP to the average of the S&P500 Index (21.94), we can say TRGP is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.48 | ||
| Fwd PE | 16.6 |
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 60.56% of the companies listed in the same industry.
TRGP's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 54.57 | ||
| EV/EBITDA | 12.67 |
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.
TRGP's earnings are expected to grow with 25.12% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.76
PEG (5Y)N/A
EPS Next 2Y29.56%
EPS Next 3Y25.12%
5. Dividend
5.1 Amount
TRGP has a Yearly Dividend Yield of 2.40%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 7.03, TRGP has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, TRGP has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
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
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 2Y29.56%
EPS Next 3Y25.12%
160.37
-1.56 (-0.96%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryOil, Gas & Consumable Fuels
Earnings (Last)
Earnings (Next)
Inst Owners92.56%
Inst Owner Change-0.13%
Ins Owners1.58%
Ins Owner Change3.62%
Market Cap34.89B
Analysts84.83
Price Target215.97 (34.67%)
Short Float %2%
Short Ratio1.82
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.4% |
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)-4.14%
PT rev (3m)1.07%
EPS NQ rev (1m)2.32%
EPS NQ rev (3m)4.33%
EPS NY rev (1m)-3.63%
EPS NY rev (3m)-2.14%
Revenue NQ rev (1m)-1.6%
Revenue NQ rev (3m)2.63%
Revenue NY rev (1m)-3.25%
Revenue NY rev (3m)0.58%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.48 | ||
| Fwd PE | 16.6 | ||
| P/S | 2.13 | ||
| P/FCF | 54.57 | ||
| P/OCF | 9.36 | ||
| P/B | 14.23 | ||
| P/tB | 62.81 | ||
| EV/EBITDA | 12.67 |
EPS(TTM)5.44
EY3.39%
EPS(NY)9.66
Fwd EY6.02%
FCF(TTM)2.94
FCFY1.83%
OCF(TTM)17.13
OCFY10.68%
SpS75.28
BVpS11.27
TBVpS2.55
PEG (NY)0.76
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 | 2.15 |
F-Score5
WACC9.99%
ROIC/WACC1.07
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 5Y17.63%
Revenue 1Y (TTM)1.73%
Revenue growth 3Y-1.13%
Revenue growth 5Y13.57%
Sales Q2Q%-0.02%
Revenue Next Year27.37%
Revenue Next 2Y18.05%
Revenue Next 3Y10.31%
Revenue Next 5Y2.98%
EBIT growth 1Y7.01%
EBIT growth 3Y26.58%
EBIT growth 5Y39.68%
EBIT Next Year73.27%
EBIT Next 3Y27.89%
EBIT Next 5Y18.62%
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%