Targa Resources Intrinsic Value Calculation – Is Targa Resources Corp Overvalued Despite its 3.61% Daily Gain and $3.86 Earnings Per Share?
August 9, 2023
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Investors have taken note of Targa Resources ($NYSE:TRGP) Corp’s recent 3.61% daily gain and its Earnings Per Share of $3.86, leading some to question whether the company may be overvalued. Targa Resources Corp is an energy services company that provides natural gas pipeline transportation, storage, gathering and processing services to its customers. It also provides natural gas gathering, processing and fractionation services to producers and end-users through its ownership in two joint ventures, including an interest in a midstream master limited partnership. Targa Resources Corp is a publicly traded company listed on the New York Stock Exchange (NYSE) under the symbol TRGP. Based on its current fundamentals, some investors have expressed concern that the stock may be overvalued despite its recent gains.
However, it is important to note that fundamental analysis and stock market dynamics are constantly changing, making it difficult to accurately assess the company’s true value in the short-term.
Earnings
TARGA RESOURCES recently reported their FY2023 Q2 earnings as of June 30 2021, and the results were mixed. The total revenue for the quarter was 3415.9M USD, a 43.6% decrease from the previous year. Net income for the quarter was 56.2M USD, a 90.6% decrease from the previous year. Despite these decreases, TARGA RESOURCES has seen an overall increase in total revenue over the last three years, rising from 3403.7M USD to 3415.9M USD.
This could be attributed to the company’s 3.61% daily gain and $3.86 earnings per share that it has seen since the start of the year. While the company’s recent quarter may not be indicative of its long-term performance, it is important to consider the overall trends that the company has seen over the last 3 years before making any decisions. Ultimately, investors must decide for themselves if TARGA RESOURCES is a sound investment or not.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Targa Resources. More…
| Total Revenues | Net Income | Net Margin |
| 17.84k | 846.6 | 7.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Targa Resources. More…
| Operations | Investing | Financing |
| 2.84k | -5.47k | 2.64k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Targa Resources. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 19.46k | 14.92k | 11.84 |
Key Ratios Snapshot
Some of the financial key ratios for Targa Resources are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 30.9% | 43.2% | 13.7% |
| FCF Margin | ROE | ROA |
| 4.8% | 58.7% | 7.9% |
Analysis – Targa Resources Intrinsic Value Calculation
We at GoodWhale have conducted an extensive analysis of TARGA RESOURCES‘s overall wellbeing. After thoroughly assessing their financials, our proprietary Valuation Line tool revealed that the fair value of TARGA RESOURCES share should be around $59.3. However, right now, the market is valuing their stock at $82.1, which is overvalued by 38.4%. We advise investors to exercise caution while dealing in TARGA RESOURCES stock. More…
Peers
The company has a strong presence in the key producing basins in the United States and is well-positioned to capitalize on the growing demand for natural gas. Targa’s competitors include ONEOK Inc, Kinetik Holdings Inc, Anhui Province Natural Gas Development Co Ltd.
– ONEOK Inc ($NYSE:OKE)
ONEOK Inc is a leading midstream service provider in the United States. It has a market cap of 24.61B as of 2022 and a Return on Equity of 28.78%. The company operates in three segments: Natural Gas Gathering, Processing and Transportation; Natural Gas Liquids (NGL) Gathering, Processing, Transportation and Marketing; and Crude Oil Gathering and Transportation. ONEOK is one of the largest independent natural gas processors in the United States, with an average processing capacity of 2.6 billion cubic feet per day in 2020. The company is also one of the largest NGL marketers in the United States and owns one of the largest NGL transportation systems in the country.
– Kinetik Holdings Inc ($NASDAQ:KNTK)
Kinetik Holdings Inc is a publicly traded company with a market capitalization of $1.49 billion as of 2022. The company has a return on equity of 5.46%. Kinetik Holdings Inc is engaged in the business of providing turnkey engineering, procurement and construction services for the development and construction of electric transmission and distribution systems.
– Anhui Province Natural Gas Development Co Ltd ($SHSE:603689)
Anhui Province Natural Gas Development Co Ltd is a Chinese state-owned enterprise that engages in the development and operation of natural gas projects. The company has a market cap of 3.45 billion as of 2022 and a return on equity of 7.42%. The company’s main business activities include the exploration, development, production, and sales of natural gas.
Summary
Targa Resources Corp is a publicly traded midstream energy company which has recently attracted attention from value investors. Analysis of the company’s performance indicates that it is modestly overvalued, with a daily gain of 3.61% and EPS of $3.86. Investors should be mindful of the risk associated with investing in such a company, as it is impossible to predict with certainty the future performance of the stock. Nevertheless, considering its strong financials and the potential for growth, Targa Resources Corp could be an attractive option for those looking for a sound long-term investment.
