- Record EBITDA Growth: Adjusted EBITDA reached $1.34 billion in Q4 2025, up 5% from Q3, with full-year adjusted EBITDA hitting $4.96 billion, a 20% increase over 2024.
- Major Capital Expansion: Announced $4.5 billion in 2026 growth capital spending, including eight new processing plants and a 13th fractionator, adding 2.2 Bcf/d of processing capacity and 320,000 bbl/d of NGL production.
- 2026 EBITDA Outlook: Full-year adjusted EBITDA guidance of $5.4–$5.6 billion, reflecting an 11% annual growth, supported by >90% fee-based cash flows and hedged non-fee margin exposure for three years.
- Long-Term EBITDA Target: Post-Speedway project completion, expects run-rate adjusted EBITDA exceeding $6 billion, with $1.9 billion liquidity as of January 2026.
- Permian Basin Growth: Permian volumes grew 11% in 2025, driven by record integrated footprint performance, with 2027 inlet growth projected at high single-digit to low double-digit rates from existing producers and new market share gains.
Growth Projects and Capital Spending
The company is announcing two new projects: its next Delaware processing plant, Yet II, and its 13th fractionator in Mont Belvieu. It is also ordering long lead items for two additional plants in the Permian planned for early 2028. This represents eight plants over the next two years, giving Targa line of sight to an incremental 2.2 billion cubic feet per day of additional processing capacity and gross NGL production of approximately 320,000 barrels per day. For 2026, Targa estimates full-year adjusted EBITDA to be between $5.4 billion and $5.6 billion, an 11% increase over 2025, and expects to invest approximately $4.5 billion in growth capital spending.
Valuation and Return Metrics
Using the current valuation metrics, the company's P/E Ratio stands at 26.13, EV/EBITDA at 13.45, and ROE at 71.36%. The high ROE indicates that the company is generating strong returns on equity, while the EV/EBITDA ratio suggests that the company's enterprise value is reasonable relative to its EBITDA. Analysts estimate next year's revenue growth at 9.8%, which is slightly higher than the current valuation multiples, suggesting that the stock may be fairly valued.
Growth Outlook and Commercial Success
The company's growth outlook is becoming stronger, particularly in the Delaware side of the Permian basin. Targa has announced new projects, including two long lead plants in the Delaware, which will add to its growth profile. The company's commercial success is driven by its strong relationships with producers, and it expects to continue to execute well for its customers. The company's margins have been strong, and it expects to continue to execute consistently with its track record.
Residue Business and Export Volumes
The company is seeing significant growth in its residue business, which has become a bigger part of its operations over the past two years. The growth is driven by the company's expansion projects, including Speedway and LPG export expansion. The company's export volumes were impacted by fog in the fourth quarter but are shaping up for a strong first quarter. The company remains well-contracted across the dock and is having many conversations about long-term supply globally coming out of the Gulf Coast.