Targa Resources Corp. Fundamental Analysis (NYSE: TRGP)
Targa Resources Corp. (NYSE: TRGP) shows moderate financial fundamentals with a PE ratio of 25.44, profit margin of 13.49%, and ROE of 72.08%. The company generates $16.8B in annual revenue with moderate year-over-year growth of 3.06%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 42.2/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze TRGP's fundamental strength across five key dimensions:
Efficiency Score
WeakTRGP struggles to generate sufficient returns from assets.
Valuation Score
ModerateTRGP shows balanced valuation metrics.
Growth Score
ModerateTRGP shows steady but slowing expansion.
Financial Health Score
WeakTRGP carries high financial risk with limited liquidity.
Profitability Score
ModerateTRGP maintains healthy but balanced margins.
Key Financial Metrics
Is TRGP Expensive or Cheap?
P/E Ratio
TRGP trades at 25.44 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, TRGP's PEG of 0.51 indicates potential undervaluation.
Price to Book
The market values Targa Resources Corp. at 15.75 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 7.81 times EBITDA. This is generally considered low.
How Well Does TRGP Make Money?
Net Profit Margin
For every $100 in sales, Targa Resources Corp. keeps $13.49 as profit after all expenses.
Operating Margin
Core operations generate 23.13 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $72.08 in profit for every $100 of shareholder equity.
ROA
Targa Resources Corp. generates $7.94 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Targa Resources Corp. generates strong operating cash flow of $4.28B, reflecting robust business health.
Free Cash Flow
Targa Resources Corp. produces free cash flow of $739.67M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $3.45 in free cash annually.
FCF Yield
TRGP converts 1.29% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
25.44
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.51
vs 25 benchmark
P/B Ratio
Price to book value ratio
15.75
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.42
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
5.51
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.77
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.72
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.15
vs 25 benchmark
How TRGP Stacks Against Its Sector Peers
| Metric | TRGP Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 25.44 | 22.27 | Worse (Expensive) |
| ROE | 72.08% | 1228.00% | Weak |
| Net Margin | 13.49% | 1247.00% | Weak |
| Debt/Equity | 5.51 | 2.78 | Weak (High Leverage) |
| Current Ratio | 0.77 | 5.40 | Weak Liquidity |
| ROA | 7.94% | 4396.00% | Weak |
TRGP outperforms its industry in 0 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Targa Resources Corp.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
123.72%
Industry Style: Cyclical, Value, Commodity
High GrowthEPS CAGR
228.19%
Industry Style: Cyclical, Value, Commodity
High GrowthFCF CAGR
142.52%
Industry Style: Cyclical, Value, Commodity
High Growth