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Targa Resources Corp. powers North America’s energy infrastructure with an extensive network that moves natural gas, liquids, and crude oil essential to daily life and industry. As a prominent player in the Oil & Gas Midstream sector, Targa excels through its integrated gathering, processing, and transportation services, backed by a reputation for operational excellence and innovation. As the energy landscape evolves, the critical question remains: does Targa’s robust asset base and market position justify its current valuation and growth outlook?
Table of contents
Business Model & Company Overview
Targa Resources Corp., founded in 2005 and headquartered in Houston, Texas, stands as a dominant player in the Oil & Gas Midstream sector. The company operates an integrated ecosystem of midstream energy assets across North America, encompassing gathering, processing, logistics, and transportation of natural gas, natural gas liquids (NGL), and crude oil. Its extensive infrastructure includes 28,400 miles of pipelines, 42 processing plants, and 34 storage wells, enabling efficient energy flow and market connectivity.
The company’s revenue engine balances substantial physical assets with service offerings, generating value through a mix of gathering, treating, transporting, and selling hydrocarbons. Targa serves diverse markets across the Americas, with strategic logistics operations supporting refineries and exporters. Its broad asset base and operational scale create a competitive advantage that underpins long-term resilience and influence over the midstream energy landscape.
Financial Performance & Fundamental Metrics
In this section, I analyze Targa Resources Corp.’s income statement, key financial ratios, and dividend payout policy to assess its overall financial health.
Income Statement
The table below presents Targa Resources Corp.’s key income statement figures for the fiscal years 2020 through 2024, reflecting revenue, expenses, profitability, and earnings per share.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| Revenue | 8.27B | 17.44B | 21.68B | 15.62B | 16.63B |
| Cost of Revenue | 6.75B | 15.35B | 18.89B | 13.08B | 13.30B |
| Operating Expenses | 257M | 273M | 310M | 349M | 381M |
| Gross Profit | 1.52B | 2.09B | 2.79B | 2.54B | 3.33B |
| EBITDA | -313M | 1.70B | 3.21B | 3.97B | 4.14B |
| EBIT | -1.18B | 825M | 2.11B | 2.63B | 2.71B |
| Interest Expense | 391M | 388M | 446M | 688M | 767M |
| Net Income | -1.55B | 71.2M | 1.14B | 828M | 1.27B |
| EPS | -7.26 | -0.07 | 3.95 | 3.69 | 5.77 |
| Filing Date | 2021-02-18 | 2022-02-24 | 2023-02-22 | 2024-02-15 | 2025-02-20 |
Income Statement Evolution
From 2020 to 2024, Targa Resources Corp. (TRGP) experienced a favorable revenue growth of 101%, with a neutral revenue growth rate of 6.45% in the most recent year. Gross profit increased significantly by 31.16% year-over-year, supporting a stable gross margin at 20%. EBIT and net income both showed moderate growth, with net margin expanding by 44% in the last year, reflecting improved profitability and margin enhancement overall.
Is the Income Statement Favorable?
In 2024, TRGP reported revenue of $16.6B and net income of $1.27B, yielding a net margin of 7.64%, which is considered favorable. EBIT margin stood at 16.27%, supported by controlled interest expenses at 4.61% of revenue. Despite a mild unfavorable trend in operating expense growth relative to revenue, the company’s fundamentals remain generally favorable, marked by strong earnings per share growth of 57% and rising profitability metrics.
Financial Ratios
The table below presents key financial ratios for Targa Resources Corp. (TRGP) over recent fiscal years, highlighting profitability, valuation, liquidity, leverage, and efficiency metrics:
| Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | -18.8% | 0.41% | 5.27% | 5.30% | 7.64% |
| ROE | -58.6% | 3.54% | 42.9% | 30.2% | 48.97% |
| ROIC | 7.37% | 13.5% | 13.2% | 9.59% | 11.8% |
| P/E | -3.94 | 168 | 14.6 | 23.6 | 31.0 |
| P/B | 2.31 | 5.94 | 6.27 | 7.12 | 15.2 |
| Current Ratio | 0.82 | 0.77 | 0.77 | 0.79 | 0.72 |
| Quick Ratio | 0.72 | 0.70 | 0.64 | 0.66 | 0.62 |
| D/E | 2.94 | 3.30 | 4.34 | 4.75 | 5.50 |
| Debt-to-Assets | 49.1% | 44.0% | 59.1% | 62.9% | 62.7% |
| Interest Coverage | 3.23 | 4.69 | 5.57 | 3.18 | 3.84 |
| Asset Turnover | 0.52 | 1.15 | 1.11 | 0.76 | 0.73 |
| Fixed Asset Turnover | 0.68 | 1.49 | 1.53 | 0.99 | 0.92 |
| Dividend Yield | 6.46% | 1.57% | 2.27% | 2.19% | 1.57% |
Evolution of Financial Ratios
From 2020 to 2024, Targa Resources Corp. saw a marked improvement in Return on Equity, rising from negative territory to a strong 48.97% in 2024. The Current Ratio has generally declined, reaching 0.72 in 2024, indicating weaker short-term liquidity. Meanwhile, the Debt-to-Equity Ratio increased significantly, hitting 5.5 in 2024, reflecting higher leverage. Profitability showed notable growth, with net margins improving to 7.64%.
Are the Financial Ratios Favorable?
In 2024, profitability metrics like ROE (48.97%) and ROIC (11.83%) are favorable, supported by a WACC of 6.75%. However, liquidity ratios such as Current Ratio (0.72) and Quick Ratio (0.62) are unfavorable, suggesting limited short-term financial flexibility. Leverage ratios including Debt-to-Equity (5.5) and Debt-to-Assets (62.75%) are also unfavorable, indicating high indebtedness. Market valuation ratios like P/E (30.96) and P/B (15.16) are unfavorable, while asset turnover and dividend yield are neutral, resulting in an overall slightly unfavorable ratio profile.
Shareholder Return Policy
Targa Resources Corp. pays dividends with a payout ratio around 48% in 2024 and a dividend yield near 1.57%, supported by free cash flow coverage slightly below 20%. The dividend per share has steadily increased over recent years, indicating a stable distribution policy, though the relatively low free cash flow coverage suggests some caution.
The company engages in share buybacks alongside dividend payments, balancing capital return methods. Given the moderate payout ratio and incremental dividend growth, the current policy appears aligned with sustainable long-term value creation, though monitoring cash flow coverage and debt levels remains prudent.
Score analysis
The radar chart below provides an overview of Targa Resources Corp.’s key financial scores across valuation, profitability, and leverage metrics:
Targa Resources scores well in profitability metrics with very favorable return on equity (5) and return on assets (5). The discounted cash flow score is favorable at 4. However, valuation and leverage scores are very unfavorable, with debt-to-equity, price-to-earnings, and price-to-book all scoring 1, indicating potential concerns in these areas.
Analysis of the company’s bankruptcy risk
Targa Resources Corp. is currently positioned in the grey zone for bankruptcy risk, reflecting a moderate chance of financial distress:
Is the company in good financial health?
The Piotroski Score diagram illustrates Targa Resources Corp.’s financial strength based on nine fundamental criteria:
With a score of 7, the company demonstrates strong financial health, suggesting solid profitability, efficient operations, and adequate leverage management relative to peers.
Competitive Landscape & Sector Positioning
This sector analysis will explore Targa Resources Corp.’s strategic positioning, revenue segments, key products, and main competitors. I will assess whether the company holds a competitive advantage within the Oil & Gas Midstream industry.
Strategic Positioning
Targa Resources Corp. concentrates its operations in North America, focusing on two main segments: Gathering and Processing, and Logistics and Transportation. With revenues of $21B in 2024, the company emphasizes midstream energy assets, operating extensive natural gas pipelines and processing plants primarily within the US market.
Revenue by Segment
This pie chart illustrates Targa Resources Corp.’s revenue distribution by segment for the fiscal year 2024, highlighting the contributions from Gathering and Processing and Logistics and Transportation.
In 2024, Logistics and Transportation led revenues with 14.0B, followed by Gathering and Processing at 6.8B. Compared to 2023, Logistics and Transportation saw a moderate increase from 13.7B, while Gathering and Processing experienced a slight decline from 7.2B. The data reveals a concentration in the Logistics and Transportation segment, which remains the primary revenue driver despite some volatility in Gathering and Processing. This trend suggests a cautious approach to segment risk is advisable.
Key Products & Brands
The following table presents Targa Resources Corp.’s main products and business segments with their descriptions:
| Product | Description |
|---|---|
| Gathering and Processing | Involves gathering, compressing, treating, processing, and selling natural gas and natural gas liquids (NGL). Includes operation of processing plants and infrastructure. |
| Logistics and Transportation | Covers transporting, storing, fractionating, terminaling, and selling NGL products and crude oil. Provides transportation services to refineries and petrochemical companies. |
| NGL Balancing Services | Services related to balancing natural gas liquids volumes within the supply chain. |
| Wholesale Propane | Purchase, resale, and wholesale distribution of propane to multi-state retailers and end-users. |
Targa Resources Corp. operates primarily through its Gathering and Processing and Logistics and Transportation segments, focusing on midstream energy infrastructure across North America. The company’s product offerings emphasize natural gas and NGL handling, transportation, and storage services.
Main Competitors
There are 4 competitors in total, with the table below listing the top 4 leaders by market capitalization:
| Competitor | Market Cap. |
|---|---|
| The Williams Companies, Inc. | 74.3B |
| Kinder Morgan, Inc. | 61.6B |
| ONEOK, Inc. | 46.8B |
| Targa Resources Corp. | 40.1B |
Targa Resources Corp. ranks 4th among its competitors, holding 55.32% of the market cap of the leader, The Williams Companies, Inc. The company’s market cap is below both the average market cap of the top 10 competitors (55.7B) and the sector median (54.2B). It maintains a 13.82% gap below the next competitor above, ONEOK, Inc., indicating a moderate distance from its closest rival.
Comparisons with competitors
Check out how we compare the company to its competitors:
Does TRGP have a competitive advantage?
Targa Resources Corp. demonstrates a durable competitive advantage with a very favorable moat status, driven by a ROIC exceeding WACC by over 5% and a strong upward ROIC trend of 60.6% from 2020 to 2024. This indicates efficient capital use, value creation, and sustained profitability in its midstream energy operations.
Looking ahead, TRGP’s future opportunities include expanding its portfolio of midstream assets across North America, focusing on natural gas, NGL, and crude oil logistics and transportation. The company’s existing infrastructure and services, combined with market growth prospects in the energy sector, support positive outlook potential.
SWOT Analysis
This SWOT analysis highlights the key internal and external factors impacting Targa Resources Corp. to guide strategic decision-making.
Strengths
- strong midstream asset portfolio
- durable competitive advantage with growing ROIC
- favorable income statement growth and profitability
Weaknesses
- high debt levels with unfavorable debt ratios
- valuation metrics (PE, PB) appear expensive
- liquidity ratios below 1 indicating tight short-term liquidity
Opportunities
- expanding natural gas and NGL demand in North America
- potential to optimize logistics and transportation segment
- leverage growing energy transition and infrastructure investments
Threats
- volatility in energy prices impacting margins
- regulatory and environmental risks
- competition from alternative energy sources and pipeline operators
Overall, Targa Resources shows strong operational and financial performance with a durable moat, but elevated leverage and valuation risks require cautious risk management. The company’s strategy should focus on debt reduction, operational efficiency, and capitalizing on growth in midstream infrastructure demand.
Stock Price Action Analysis
The following weekly stock chart illustrates Targa Resources Corp. (TRGP) price movements over the last 12 months, highlighting key trend developments and volatility patterns:
Trend Analysis
Over the past 12 months, TRGP stock price increased by 92.77%, indicating a bullish trend with clear acceleration. The price moved from a low of 99.34 to a high of 215.72, supported by a high standard deviation of 28.31, reflecting significant volatility during this period.
Volume Analysis
Over the last three months, trading volume shows a buyer-dominant pattern with 69.41% buyer activity. Despite this, total volume is decreasing, suggesting reduced market participation but sustained investor interest on the buying side. This may indicate cautious optimism among traders.
Target Prices
The current analyst consensus for Targa Resources Corp. (TRGP) indicates a strong bullish outlook.
| Target High | Target Low | Consensus |
|---|---|---|
| 228 | 196 | 213.29 |
Analysts expect the stock to trade between $196 and $228, with an average consensus target around $213, reflecting positive market sentiment.
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Analyst & Consumer Opinions
This section provides an overview of analyst ratings and consumer feedback regarding Targa Resources Corp.’s recent performance.
Stock Grades
The following table presents the recent stock grades for Targa Resources Corp. from established financial institutions:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Wells Fargo | Maintain | Overweight | 2025-12-18 |
| Scotiabank | Maintain | Sector Outperform | 2025-12-17 |
| RBC Capital | Maintain | Outperform | 2025-12-03 |
| RBC Capital | Maintain | Outperform | 2025-11-18 |
| Scotiabank | Maintain | Sector Outperform | 2025-11-13 |
| Goldman Sachs | Maintain | Buy | 2025-11-13 |
| Morgan Stanley | Maintain | Overweight | 2025-11-12 |
| BMO Capital | Maintain | Outperform | 2025-11-06 |
| JP Morgan | Maintain | Overweight | 2025-10-07 |
| Mizuho | Maintain | Outperform | 2025-08-29 |
Overall, the consensus among these reputable analysts has been consistently positive, with all maintaining favorable ratings such as Overweight, Outperform, or Buy. This pattern indicates stable confidence in the stock’s prospects throughout late 2025.
Consumer Opinions
Targa Resources Corp. (TRGP) evokes mixed sentiments among consumers, reflecting both appreciation for its services and concerns about operational challenges.
| Positive Reviews | Negative Reviews |
|---|---|
| Reliable midstream energy services with strong infrastructure. | Occasional delays in service delivery reported. |
| Transparent communication and responsive customer support. | Pricing can be unpredictable during market volatility. |
| Commitment to safety and environmental standards praised. | Some users mention complexity in contract terms. |
Overall, consumer feedback on Targa Resources highlights its robust infrastructure and customer service as key strengths, while operational delays and pricing issues remain areas for improvement.
Risk Analysis
The following table summarizes key risks associated with Targa Resources Corp. based on financial and operational factors:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Financial Leverage | High debt-to-equity ratio (5.5) and debt-to-assets (62.75%) indicate significant leverage risk. | High | High |
| Valuation | Unfavorable PE (30.96) and PB (15.16) ratios suggest the stock may be overvalued. | Medium | Medium |
| Liquidity | Low current ratio (0.72) and quick ratio (0.62) signal weak short-term liquidity. | Medium | Medium |
| Market Volatility | Beta of 0.874 implies moderate sensitivity to market swings, though less volatile than market. | Medium | Medium |
| Bankruptcy Risk | Altman Z-Score (2.39) places the company in the grey zone, indicating moderate bankruptcy risk. | Medium | High |
| Operational Risks | Exposure to fluctuating oil & gas prices and regulatory changes in the energy sector. | Medium | High |
The most significant risks combine high financial leverage and moderate bankruptcy risk, as indicated by the Altman Z-Score in the grey zone. Despite strong return on equity and assets, the firm’s heavy debt load requires caution, especially amid volatile energy markets and elevated valuation multiples.
Should You Buy Targa Resources Corp.?
Targa Resources Corp. appears to be delivering improving operational efficiency and strong value creation, supported by a durable competitive moat with growing profitability. Despite a substantial leverage profile and mixed valuation metrics, its overall B rating suggests a cautiously favorable investment profile.
Strength & Efficiency Pillars
Targa Resources Corp. exhibits robust profitability with a return on equity (ROE) of 48.97% and a solid return on invested capital (ROIC) of 11.83%, both indicating efficient use of capital. Its ROIC notably exceeds the weighted average cost of capital (WACC) at 6.75%, confirming the company as a clear value creator. Financial health metrics present a mixed but generally positive picture: the Altman Z-Score at 2.39 places it in the grey zone, suggesting moderate bankruptcy risk, while a Piotroski score of 7 reflects strong financial strength. The firm’s EBIT margin of 16.27% and net margin of 7.64% further underscore operational efficiency.
Weaknesses and Drawbacks
Despite operational strengths, Targa Resources faces valuation and leverage challenges. Its price-to-earnings (P/E) ratio of 30.96 and price-to-book (P/B) ratio of 15.16 indicate a premium valuation that may expose investors to downside risk if growth expectations falter. Leverage is a significant concern, with a debt-to-equity ratio of 5.5 and a debt-to-assets ratio of 62.75%, reflecting heavy reliance on debt financing. Liquidity ratios are weak, with a current ratio of 0.72 and quick ratio of 0.62, signaling potential short-term solvency issues. These factors create financial risks that warrant cautious scrutiny.
Our Verdict about Targa Resources Corp.
Targa Resources Corp. presents a fundamentally favorable long-term profile, supported by strong profitability and value creation metrics. Coupled with a bullish overall stock trend and recent buyer dominance of 69.41%, the outlook may appear attractive for long-term exposure. However, elevated leverage and stretched valuation suggest that investors might consider a measured approach, monitoring for improved financial resilience or a more attractive entry point before committing significant capital.
Disclaimer: This content is for informational purposes only and does not constitute financial, investment, or other professional advice. Investing in financial markets involves a significant risk of loss, and past performance is not indicative of future results.
Additional Resources
- Targa Resources, Inc. $TRGP Shares Sold by Mitsubishi UFJ Trust & Banking Corp – MarketBeat (Jan 24, 2026)
- Palmetto Grain Brokerage – – Palmetto Grain Brokerage (Jan 19, 2026)
- Here’s Why Oakmark Select Fund Backs Targa Resources (TRGP) – Yahoo Finance (Jan 14, 2026)
- Is It Time To Reassess Targa Resources (TRGP) After Its Recent Share Price Rebound – Sahm (Jan 16, 2026)
- Planned Dividend Hike Could Be A Game Changer For Targa Resources’ Capital Return Story (TRGP) – simplywall.st (Jan 18, 2026)
For more information about Targa Resources Corp., please visit the official website: targaresources.com
