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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Targa Resources Corp. (XNYS:TRGP) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
TRGP
Name:
TARGA RESOURCES CORP. (XNYS:TRGP)
Sector:
543.80M
Industry:
Oil & Gas Midstream
CEO:
Mr. Matthew Meloy
Total Employees:
2,430
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -129.88% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF TARGA RESOURCES CORP.(TRGP) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND OIL & GAS MIDSTREAM INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
69.62
One Month Price Target:
$70.56
Six Month Price Target :
$75.25
Likely Price in One Year's Time:
Ticker:
$80.88
Likely Trading Range Today Under (Normal Volatility)
$69.21
Price Upper limit ($) :
$70.33
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$62.99
This week:
$54.8
This month :
$39.99
Other Primary facts
Market Cap:
15.42B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
226.56M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
35.1%
-52.91%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$100.33
$86.02
$38.91
$53.22
Medium risk (<10%) entry points
Buy Call
Sell Call
$81.37
Buy Put:
Sell Put:
$78.31
$57.83
$60.93
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
TRGP
Sharpe Ratio:
4.45%
Comparison:
TRGP, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 55.23% higher than the industry
& ratio is 95.15% higher than the market/S&P 500 average
Average Returns/Yield of
TRGP
Daily returns:
0.22%
Weekly returns:
1.10%
Monthly returns:
4.39%
Yearly returns:
30.53%
Comparison of returns:
Average annual returns/yield (last 3 years) is 72.72% above industry average
Classification:
TRGP, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.29
Statistical test of Returns:
TRGP has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
4.74%
Weekly Volatility:
10.60%
Monthly Volatility:
21.20%
Yearly Volatility:
73.44%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.96%
Volatility in last five trading days has been -37.56% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-9.52%
Weekly VaR:
-21.28%
Monthly VaR:
-42.56%
How Much Can the price of
TRGP
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-35%
Worst case (decline):
>85%
This translates to price declining to:
$45.18
This translates to price declining to:
$10.44
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
TRGP is a 200.39% riskier investment compared to the market/S&P 500 & is 157.34% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 17.00% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
TRGP
Beta in relation to market/S&P 500--2.41
Expected beta in 1 year's time:
1.33
Expected beta in 3 year's time:
1.881
Unlevered (debt free) Beta:
0.495
Beta in relation to Nasdaq (XNAS):
1.083
Beta in relation to all global stocks::
1.154
Beta Comparison & Analysis
Beta of competitors/peers::
1.959
Beta is 22.81% higher than peers
Average Industry Beta:
1.441
Beta is 66.99% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
21.39%
Sustainable growth rate is -70.29% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.331
Alpha is 89.03% above industry average alpha yield
Alpha is 2107% higher than market/& is unsustainably high
Analysis of Cost of Capital of
TRGP
Equity cost of capital:
0.196
Equity cost of capital is 50.78% above industry mean WACC
Unlevered (without debt) cost of capital:
4.04%
Before-tax cost of debt:
1.18%
After-tax cost of debt:
0.93%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.93%
WACC is 27.50% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$80.67
Revenue growth rate per share of (3Y):
3.93
Annual revenue growth rate is -60.49% below industry average
EPS:
-$0.68
Expected Annual growth rate of EPS (3Y):
-63.50%
Expected future EPS growth rate is 6968.98% higher than the Oil & Gas Midstream industry
Free cash flow (FCF) per share:
$7.53
Balance sheet equity growth per share: -80.31%
Equity growth rate per share is 3970.76% higher than the industry
Debt per share
$30.74
EBITDA per share
$4.35
Valuation Analysis Today of
TRGP
P/E Ratio:
89.06
P/E Ratio of Competitors/Peers:
43.15
P/E ratio is 106.42% higher than main peers & is 397.20% higher than the industry
-
TRGP is -671.54% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $50.92
Present value of the expected future dividends only: $29.58
P/S (Price to Sales ratio):
0.86
Price to sales ratio is -68.88% below the industry mean
P/B (Price to book value ratio):
3.93
Price to free cash flow: 9.25
-
Net income growth rate (3Y):
4196.68%
Net income growth rate is -2551.74% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 843.75%
Dividend yeild: 1.29%
Previous Dividend: $0.35
Previous adjusted dividend: $0.35
Previous Dividend: $0.90
Expected next dividend best case: $0.62
Expected next dividend worst case: $0.08
Average dividend payment (long-term): $0.29
Average dividend increase/decrease (growth rate) % per period: 16.10%
Expected next dividend payment date: 15/08/2022
Expected next dividend record date: 28/07/2022
Expected next dividend declaration date: 13/07/2022
Previous dividend payment date: 16/05/2022
Previous dividend record date: 29/04/2022
Previous dividend declaration date: 14/04/2022
Dividend History:
2022-04-28--$0.35
2021-10-28--$0.10
2021-04-29--$0.10
2022-01-28--$0.35
2021-07-29--$0.10
2021-01-29--$0.10
Dividend growth rate is -99.67% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
410.42%
Net debt to equity ratio:
419.14%
Debt to assets ratio:
45.54%
Net debt to assets ratio:
46.50%
Debt-to-asset ratio is -34.40% below industry average
Ability to repay debt:
Interest coverage ratio:
11.54
Interest coverage ratio is 117.60% more than industry average
Looking forward:
Debt growth rate:
-14.49%
Annual debt growth is -834% lower than industry average debt growth rate
Debt repayment rate in last quarter: 16.97%
Analysis of Key Statistics
Correlation of price movement with the market:
0.501
Statistical significance of correlation:
TRGP has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.464
Stock price is 7.99% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.464
Correlation of price movement with Nasdaq (^IXIC):
0.042
Covariance of price movement with the market:
0.116
Kurtosis
33.805
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-2.348
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
TRGP
Gross Profit Margin Ratio:
51%
Operating Profit Margin Ratio:
4.47%
Operating profit margin is -78.00% lower than the industry
Net Profit Margin Ratio:
51%
Effective Tax Rate:
5.91%
Effective tax rate is -67.59% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
0.75%
Return on equity (ROE) is -98.65% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
0.08%
Return on assets (ROA) is -97.54% lower than the industry
Financial Leverage:
1.8x
Current Ratio:
0.65
Current ratio is -62.01% below industry average
Cash Conversion Cycle (days):
-341
Cash conversion cycle is -675.24% below industry average
The remaining useful life of property plant & equipment is: 7.0 years
Stock based compensation to net income ratio:
105.47%
In-depth Efficiency Analysis
Revenue generated per employee:
7.5M
Each employee generates 21% more revenue than industry average revenue per employee
EBITDA generated per employee:
405.1K
Each employee generates 17% more EBITDA than industry average revenue per employee
Profit generated per employee:
5.3K
Each employee generates -102% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
223.8K
Each employee generates -47% less free cash flow than industry average revenue per employee
Assets/Capital per employee
5.5M
Each employee generates -47% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
TRGP
Tenaris SA (XNYS:TS)
MARATHON OIL CORPORATION (XNYS:MRO)
SASOL LIMITED (XNYS:SSL)
OVINTIV INC. (XNYS:OVV)
TEXAS PACIFIC LAND CORPORATION (XNYS:TPL)
WESTERN GAS EQUITY PARTNERS COM UNT (XNYS:WES)
CAMECO CORPORATION (XNYS:CCJ)
PHILLIPS 66 PARTNERS COM UNT (XNYS:PSXP)
Cognor Holding S.A. (XWAR:COG)
Current Analyst Ratings
Strong buy�25%
Buy�21%
Hold�33%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
18.28B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
15.96B
2.32B
-
278.90M
278.90M
-
755.30M
1.03B
-
85.30M
863.50M
984.40M
816.50M
12.80M
385.60M
22.80M
12.80M
Statement of Cash Flow
Date:
Period:
209.10M
Differed Income Tax :
21.10M
Stock Based Compensation :
13.50M
Change in Working Capital :
139.20M
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
196.70M
Net Cash Provided by Operating Activities:
748.20M
Investments in PP&E:
- 204400.00K
Net Acquisitions:
6.40M
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
135.90M
-
135.90M
1.57B
97.50M
99.90M
1.90B
11.65B
-
-
579.80M
-
95.30M
13.39B
-
15.30B
1.80B
283.80M
-
-
823.10M
2.91B
6.96B
1.31B
8.37B
-
11.28B
200.00K
- 1734300.00K
- 418400.0K
3.85B
March 31, 2022 at 6:00:00 AM
17.00B
1.70B
12.98B
-
7.25B
7.1B
-
1.00M
- 197000.00K
- 1423900.00K
-
- 72200.00K
- 108000.00K
1.03B
- 573800.00K
-
- 22600.00K
135.90M
158.50M
748.20M
- 204400.00K
543.80M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
TRGP
2023
2024
2025
2026
2027
$62.57
$72.68
$84.44
$98.09
$113.95