Targa Resources Sees Promising Growth but is Close to Maximum Valuation
December 7, 2023
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Targa Resources ($NYSE:TRGP) is a publicly traded company in the energy sector that provides integrated midstream services. It has seen a significant increase in value over the past few years and offers great growth potential to investors.
However, its current valuation is nearly reaching its peak, meaning that investors should be more cautious about investing large amounts of money into the company. Despite the risks associated with investing in a company that is close to its maximum valuation, Targa Resources continues to offer promising growth opportunities as it has strong fundamentals and employs a customer-centric strategy. It has an experienced management team with extensive knowledge of the industry, as well as investments in new technologies and processes that should help it continue to grow in the future.
Market Price
TARGA RESOURCES has seen promising growth over the past year, however its stock appears to be close to its maximum valuation. On Tuesday, TARGA RESOURCES stock opened at $89.0 and closed at $87.8, a decrease of 1.7% from the prior closing price of 89.3. This indicates that investors may be wary of the stock’s capacity for further growth, and may be reaching its maximum potential. Live Quote…
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 |
| 16.38k | 873.5 | 8.3% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Targa Resources. More…
| Operations | Investing | Financing |
| 2.79k | -2.18k | -668.9 |
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 |
| 20.19k | 15.81k | 11.2 |
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 |
| 26.1% | 30.5% | 15.5% |
| FCF Margin | ROE | ROA |
| 3.7% | 61.4% | 7.9% |
Analysis
GoodWhale has performed an analysis on TARGA RESOURCES‘s financials, and based on our Star Chart classification, TARGA RESOURCES is classified as a ‘cheetah’, a company that has achieved high revenue or earnings growth but is considered less stable due to lower profitability. Such a company may be of interest to investors looking for a potentially high-growth opportunity with more risk than the average. TARGA RESOURCES has an intermediate health score of 6/10 with regard to its cashflows and debt, indicating that it is likely to pay off debt and fund future operations. TARGA RESOURCES is strong in asset, dividend, and growth, and medium in profitability. This combination of factors makes it an attractive option for investors looking for a high-growth opportunity with potential risk. 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 (TRGP) is an attractive investment option in the midstream energy sector with promising growth prospects. It has a strong operational track record, supported by its leading position in the midstream value chain and diversified asset portfolio. The company’s growth opportunities are driven by its strategic investments in development projects, increased demand from the export markets, and the benefits of scale from its merger and acquisition activities.
However, the current valuations of the stock may be too high, limiting potential upside for investors. Despite the high valuation, investors may find Targa Resources an attractive option due to its quality assets, strategic investments, and attractive dividend yields.
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