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1. Company Snapshot

1.a. Company Description

Targa Resources Corp., together with its subsidiary, Targa Resources Partners LP, owns, operates, acquires, and develops a portfolio of midstream energy assets in North America.The company operates in two segments, Gathering and Processing, and Logistics and Transportation.It engages in gathering, compressing, treating, processing, transporting, and selling natural gas; storing, fractionating, treating, transporting, and selling natural gas liquids (NGL) and NGL products, including services to liquefied petroleum gas exporters; and gathering, storing, terminaling, purchasing, and selling crude oil.


The company is also involved in the purchase and resale of NGL products; and wholesale of propane, as well as provision of related logistics services to multi-state retailers, independent retailers, and other end-users.In addition, it offers NGL balancing services; and transportation services to refineries and petrochemical companies in the Gulf Coast area, as well as purchases, markets, and resells natural gas.The company operates approximately 28,400 miles of natural gas pipelines, including 42 owned and operated processing plants; and owns or operates a total of 34 storage wells with a gross storage capacity of approximately 76 million barrels.


As of December 31, 2021, it leased and managed approximately 648 railcars; 119 transport tractors; and two company-owned pressurized NGL barges.The company was incorporated in 2005 and is headquartered in Houston, Texas.

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1.b. Last Insights on TRGP

Targa Resources Corp.'s recent performance was driven by strong Q3 2025 earnings, with adjusted EBITDA reaching a record $1.3 billion, a 19% year-over-year increase. The company's Permian Natural Gas Inlet Volumes averaged 6.6 billion, with strategic growth initiatives. A quarterly dividend of $1.00 per common share was declared, and a 25% increase to its 2026 common dividend is expected. The company also announced a $1.75 billion offering of Senior Notes to support growth projects, including new investments in its Permian Basin operations.

1.c. Company Highlights

2. Targa Resources' Strong Q3 Earnings Driven by Permian Growth

Targa Resources Corp.'s third-quarter 2025 financial performance was robust, with adjusted EBITDA reaching a record $1.275 billion, a 19% increase from the previous year and a 10% increase sequentially. The company's actual EPS came out at $2.26, beating estimates of $2.11. The strong financial performance was driven by significant growth in Permian volumes, with NGL volumes increasing by about 180,000 barrels per day compared to the same period last year. The company's revenue growth is expected to continue, with analysts estimating a 20.6% revenue growth for the next year.

Publication Date: Nov -06

📋 Highlights
  • Record Q3 2025 Adjusted EBITDA:: Achieved $1.275 billion, up 19% YoY and 10% sequentially.
  • Full-Year 2025 EBITDA Guidance Raised:: Expected to reach the upper end of $4.85 billion, reflecting strong performance.
  • Permian Volumes Growth:: 340 MMcf/d gas and 180,000 bbls/day NGLs increase YoY, with 10%+ 2025 growth projected.
  • Dividend Increase and Buybacks:: 25% dividend boost to $5/share for 2026 and $642 million in share repurchases YTD.
  • Liquidity and Leverage:: $2.3 billion liquidity and 3.6x pro forma leverage ratio, supporting growth projects like Yeti and Copperhead.

Operational Highlights

The company's operational performance was equally impressive, with Permian volumes growing by more than 340 million cubic feet per day and nearly 700 million cubic feet per day compared to the same period last year. Targa's growth is driven by its customers' success in the Permian, with the company seeing at least 10% growth in its Permian volumes for 2025 and low double-digit growth in 2026. The company expects meaningful long-term growth in Permian gas and NGL volumes across its footprint.

Growth Projects and Investments

Targa announced several new growth projects, including the Speedway NGL transportation expansion, the Yeti gas processing plant in Texas, and the Buffalo Run expansion of its Permian natural gas pipeline system. The company is also investing in its intra-basin residue strategy, with two new pipes expected to come online in late 2026, which will add material capacity. The company's management team discussed their strategic approach to investing in their system, citing a focus on capital efficiency and providing the best-in-class operational support for their producer customers.

Valuation and Dividend

With a P/E Ratio of 23.12 and an EV/EBITDA of 11.49, the company's valuation appears reasonable considering its growth prospects. The company has a strong track record of returning capital to shareholders, with a dividend yield of 2.3%. The company intends to recommend a 25% increase in its annual common dividend to $5 per share, effective for the first quarter of 2026. The company's ROE is 59.74%, indicating a strong return on equity.

Outlook and Conclusion

Targa Resources' management team is confident about the company's growth prospects, driven by its integrated NGL infrastructure and industry-leading growth. The company expects a substantial increase in free cash flow once its downstream projects come online in 2027. With a robust free cash flow profile expected in the coming years, the company is well-positioned to continue returning capital to shareholders through dividend increases and opportunistic share repurchases.

3. NewsRoom

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Targa Resources to Acquire Stakeholder Midstream for $1.25 Billion

Dec -01

Source: wsj.com

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Targa Resources to acquire Stakeholder Midstream for $1.25 billion

Dec -01

Source: reuters.com

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Targa Resources Corp. to Acquire Permian Basin Gathering & Processing System for $1.25 Billion

Dec -01

Source: globenewswire.com

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Bill Nygren's Strategic Moves: Centene Corp Exits with a -2.14% Impact

Nov -25

Source: gurufocus.com

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Bahl & Gaynor Inc. Has $170.56 Million Stake in Targa Resources, Inc. $TRGP

Nov -22

Source: defenseworld.net

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AXQ Capital LP Has $1.54 Million Holdings in Targa Resources, Inc. $TRGP

Nov -22

Source: defenseworld.net

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Targa Resources: Underlying Cash Flow Is Underappreciated

Nov -20

Source: seekingalpha.com

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Campbell & CO Investment Adviser LLC Makes New Investment in Targa Resources, Inc. $TRGP

Nov -17

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.30%)

6. Segments

Logistics and Transportation

Expected Growth: 15.0%

The demand for natural gas and NGLs is expected to remain strong due to their cleaner burning characteristics compared to coal, potentially driving growth in this segment above the global average. Infrastructure expansion and the need for reliable transportation will likely support this higher growth rate.

Gathering and Processing

Expected Growth: 16.0%

With the ongoing production of natural gas, the need for gathering and processing services is expected to grow. The shift towards cleaner energy sources and the potential for increased drilling activities in shale plays could drive this segment's growth above the global average.

Other

Expected Growth: 10.0%

The growth in this segment is less directly tied to the operational performance of the company. Interest income and unallocated overhead can fluctuate based on various factors, including interest rates and corporate decisions, potentially leading to a more conservative growth estimate.

Corporate and Eliminations

Expected Growth: 14.3%

As this segment involves eliminations and unallocated corporate overhead, its growth is assumed to track the global growth hypothesis closely, as it is more of an accounting adjustment rather than an operational segment.

7. Detailed Products

Natural Gas Gathering and Processing

Targa Resources Corp. provides natural gas gathering and processing services, which involves collecting and processing natural gas from wells and transporting it to market.

Natural Gas Liquids (NGLs) Logistics and Marketing

Targa Resources Corp. provides logistics and marketing services for NGLs, including transportation, storage, and marketing of NGLs.

Crude Oil Gathering and Logistics

Targa Resources Corp. provides crude oil gathering and logistics services, which involves collecting and transporting crude oil from wells to refineries.

Petroleum Logistics and Marketing

Targa Resources Corp. provides logistics and marketing services for petroleum products, including transportation, storage, and marketing of refined petroleum products.

8. Targa Resources Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Targa Resources Corp. is medium due to the availability of alternative energy sources, such as renewable energy and other fossil fuels.

Bargaining Power Of Customers

The bargaining power of customers for Targa Resources Corp. is low due to the company's diversified customer base and lack of dependence on a single customer.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Targa Resources Corp. is medium due to the company's dependence on a few key suppliers for raw materials and equipment.

Threat Of New Entrants

The threat of new entrants for Targa Resources Corp. is low due to the high barriers to entry in the energy industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Targa Resources Corp. is high due to the competitive nature of the energy industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 82.27%
Debt Cost 6.89%
Equity Weight 17.73%
Equity Cost 14.81%
WACC 8.30%
Leverage 463.91%

11. Quality Control: Targa Resources Corp. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Enterprise Products Partners

A-Score: 6.9/10

Value: 5.7

Growth: 5.0

Quality: 4.9

Yield: 10.0

Momentum: 6.0

Volatility: 10.0

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Energy Transfer

A-Score: 6.7/10

Value: 7.2

Growth: 3.6

Quality: 4.1

Yield: 10.0

Momentum: 6.0

Volatility: 9.3

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Kinder Morgan

A-Score: 6.4/10

Value: 4.0

Growth: 3.6

Quality: 5.2

Yield: 9.0

Momentum: 7.0

Volatility: 9.3

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Cheniere Energy

A-Score: 6.2/10

Value: 4.8

Growth: 8.8

Quality: 6.2

Yield: 1.0

Momentum: 8.5

Volatility: 8.0

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ONEOK

A-Score: 6.0/10

Value: 5.5

Growth: 5.2

Quality: 4.8

Yield: 10.0

Momentum: 2.0

Volatility: 8.3

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Targa Resources

A-Score: 5.0/10

Value: 2.9

Growth: 6.3

Quality: 4.7

Yield: 4.0

Momentum: 5.0

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

180.74$

Current Price

180.74$

Potential

-0.00%

Expected Cash-Flows