Targa Resources Corp. (TRGP) stock analysis

P/E below its 5-year median

Targa Resources's P/E of 25.8 is below its own 5-year median of 27.7.

P/E above the industry

Targa Resources's P/E of 25.8 is above the Gas Production and Distribution median of 17.3.

EV/EBITDA above its 5-year median

Targa Resources's EV/EBITDA of 14.1 is above its 5-year median of 12.5.

P/B above the industry

Targa Resources's price-to-book of 16.40 is above the Gas Production and Distribution median of 2.10.

Trading above fair value

The share price of $291.78 is above our fair value estimate of $230.16.

Margin of safety under 20%

The price is 26.8% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -6.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 29.8% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew 4.7% over the last twelve months; the Gas Production and Distribution median is 13.6%.

Guidance lowered

Targa Resources lowered its 2026 net maintenance capital expenditures outlook on Aug 6, 2026.

Gross margin improving

Gross margin was 41.8% over the last twelve months, against 36.0% a year earlier.

Return on equity over 15%

Return on equity was 75.0% over the last twelve months and averaged 44.2% over five years.

Return on capital over 10%

Return on invested capital was 15.3%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Targa Resources's return on equity of 75.0% is above the Gas Production and Distribution median of 12.1%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 13.5% over the last twelve months, against a 5-year average of 6.8%.

Net margin above the industry

Targa Resources's net margin of 13.5% is above the Gas Production and Distribution median of 13.1%.

High debt

Debt is 505% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 292% five years ago to 505%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 26.2% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.74 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.66; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Targa Resources paid dividends worth 1.2% of the share price over the last twelve months.

Yield below Treasuries

The 1.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Targa Resources yields 1.2%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.