Targa Resources (TRGP)
Energy · $58.7B market cap · SEC CIK 0001389170
ahead of 15% of the S&P 500 · #19 of 21 in Energy
Next reports on Feb 17, 2027, after the close, with analysts expecting $2.91 in earnings per share.
52-week range $166.18 to $316.60. 11% below its 52-week high and 69% above its low.
The case for TRGP
- Earns 72% on shareholder equity, a figure flattered by a small equity base.
- Has compounded revenue at 15.6% a year over five years.
- Moves less than the market (beta 0.79).
- Pays a modest 2.3% dividend.
- Up 59.0% over the past year.
The case against
- Expensive for its growth: 32.2× mid-cycle earnings, where 6%+ a year of growth plus a 2.3% dividend would justify about 20×.
- Revenue was flat on the year (−2.0%).
- Only 30% of FY2025's $1.9B profit arrived as free cash.
- Current liabilities exceed current assets (ratio 0.77).
- Long-term debt of $17.4B against $166M of cash.
- Free cash flow is only 1.0% of its market value, a thin cash return for the price.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Energy companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 14 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 47 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 43 |
| Momentumhow the price has behaved lately | 74 |
| Stabilityhow violently it moves, what it owes and what it pays you | 30 |
- Its profits follow commodity prices, so its earnings and margin are read as half the latest year and half the average of the years on file (5), and last year's change in earnings per share is not counted as growth.
- Each factor except momentum is half fixed thresholds, half rank among the 21 Energy companies.
The financials
Revenue growth
Is the business growing? No, flat
| Last 12 months | −2.0% |
|---|---|
| Over 5 years | +15.6% a year |
| FY2025 revenue | $17.0B (+4%) |
Free cash flow
Is it generating real cash? Less than its profits suggest
| FY2025 free cash flow | $584M |
|---|---|
| Of revenue | 3% |
| Of profit | 30% |
Profit margins
Is profitability improving? Yes, improving
| Gross margin | 43% |
|---|---|
| Operating margin | 23% |
| Net margin, FY24 → FY25 → now | 8.0% → 11.3% → 13.5% |
Debt vs. cash
Is the balance sheet healthy? Mostly, with some debt to carry
| Cash | $166M |
|---|---|
| Long-term debt | $17.4B |
| Net debt | $17.3B |
| Years to repay | 4.5 yrs |
Valuation
Is the stock price reasonable? No, expensive
| P/E | 25.9× |
|---|---|
| P/E on mid-cycle earnings | 32.2× |
| Fair P/E for its growth | 20× |
| P/FCF | 100.5× |
| Forward P/E | 26.0× |
| EV / EBITDA | 14.2× |
Its profits follow commodity prices, so they are taken as half the latest year and half the average of recent years. At 32.2× those mid-cycle earnings (25.9× the latest year's) it trades above the 20× that 6%+ a year of growth plus a 2.3% dividend would justify. At 100.5× free cash flow it trades well above that same mark.
The financials, five years deep
Pulled from Targa Resources's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2021 | FY2020 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $17.0B | $16.4B | $16.1B | $20.9B | $16.9B |
| Change on the year | +4% | +2% | — | +23% | — |
| Free cash flow | |||||
| Free cash flow | $584M | $684M | $826M | $1.0B | $1.8B |
| Of revenue | 3% | 4% | 5% | 5% | 11% |
| Profit margins | |||||
| Operating margin | 19.6% | 16.5% | 16.4% | 8.3% | 5.1% |
| Net margin | 11.3% | 8.0% | 8.4% | 5.7% | 0.4% |
| Debt vs. cash | |||||
| Cash | $166M | $157M | $142M | $219M | $159M |
| Long-term debt | $17.4B | $14.2B | $13.0B | $11.5B | $6.6B |
| Net cash (debt) | −$17.3B | −$14.0B | −$12.8B | −$11.3B | −$6.4B |
Filings
The text of this 10-K could not be read automatically. The original is linked below.