Intrinsic value of Targa Resources - TRGP

Previous Close

$47.81

  Intrinsic Value

$6.09

stock screener

  Rating & Target

str. sell

-87%

Previous close

$47.81

 
Intrinsic value

$6.09

 
Up/down potential

-87%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TRGP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.48
  29.10
  26.69
  24.52
  22.57
  20.81
  19.23
  17.81
  16.53
  15.37
  14.34
  13.40
  12.56
  11.81
  11.13
  10.51
  9.96
  9.47
  9.02
  8.62
  8.26
  7.93
  7.64
  7.37
  7.14
  6.92
  6.73
  6.56
  6.40
  6.26
  6.14
Revenue, $m
  6,691
  8,638
  10,944
  13,627
  16,703
  20,179
  24,059
  28,344
  33,028
  38,106
  43,569
  49,408
  55,616
  62,182
  69,100
  76,365
  83,972
  91,921
  100,211
  108,847
  117,833
  127,177
  136,890
  146,983
  157,471
  168,372
  179,704
  191,487
  203,745
  216,502
  229,785
Variable operating expenses, $m
 
  8,433
  10,679
  13,292
  16,287
  19,672
  23,451
  27,624
  32,186
  37,131
  42,451
  48,117
  54,162
  60,557
  67,294
  74,369
  81,777
  89,518
  97,592
  106,002
  114,753
  123,853
  133,311
  143,141
  153,355
  163,971
  175,007
  186,482
  198,420
  210,843
  223,779
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,683
  8,433
  10,679
  13,292
  16,287
  19,672
  23,451
  27,624
  32,186
  37,131
  42,451
  48,117
  54,162
  60,557
  67,294
  74,369
  81,777
  89,518
  97,592
  106,002
  114,753
  123,853
  133,311
  143,141
  153,355
  163,971
  175,007
  186,482
  198,420
  210,843
  223,779
Operating income, $m
  8
  205
  265
  335
  416
  506
  608
  720
  842
  975
  1,118
  1,291
  1,454
  1,625
  1,806
  1,996
  2,195
  2,403
  2,619
  2,845
  3,080
  3,324
  3,578
  3,842
  4,116
  4,401
  4,697
  5,005
  5,326
  5,659
  6,006
EBITDA, $m
  766
  1,178
  1,492
  1,858
  2,277
  2,751
  3,280
  3,864
  4,503
  5,195
  5,940
  6,736
  7,582
  8,477
  9,421
  10,411
  11,448
  12,532
  13,662
  14,839
  16,064
  17,338
  18,662
  20,038
  21,468
  22,955
  24,499
  26,106
  27,777
  29,516
  31,327
Interest expense (income), $m
  282
  249
  358
  487
  637
  810
  1,005
  1,222
  1,463
  1,725
  2,010
  2,316
  2,644
  2,992
  3,360
  3,748
  4,155
  4,582
  5,027
  5,492
  5,977
  6,480
  7,004
  7,549
  8,115
  8,703
  9,314
  9,950
  10,610
  11,298
  12,013
Earnings before tax, $m
  -260
  -44
  -93
  -152
  -222
  -304
  -397
  -503
  -620
  -750
  -892
  -1,025
  -1,190
  -1,366
  -1,554
  -1,752
  -1,960
  -2,179
  -2,408
  -2,647
  -2,897
  -3,156
  -3,426
  -3,707
  -3,999
  -4,302
  -4,617
  -4,944
  -5,285
  -5,639
  -6,007
Tax expense, $m
  -101
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -187
  -44
  -93
  -152
  -222
  -304
  -397
  -503
  -620
  -750
  -892
  -1,025
  -1,190
  -1,366
  -1,554
  -1,752
  -1,960
  -2,179
  -2,408
  -2,647
  -2,897
  -3,156
  -3,426
  -3,707
  -3,999
  -4,302
  -4,617
  -4,944
  -5,285
  -5,639
  -6,007

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  74
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  12,871
  16,516
  20,925
  26,056
  31,936
  38,583
  46,002
  54,194
  63,151
  72,860
  83,306
  94,471
  106,340
  118,895
  132,123
  146,013
  160,559
  175,757
  191,609
  208,120
  225,302
  243,168
  261,739
  281,038
  301,093
  321,935
  343,602
  366,133
  389,570
  413,962
  439,359
Adjusted assets (=assets-cash), $m
  12,797
  16,516
  20,925
  26,056
  31,936
  38,583
  46,002
  54,194
  63,151
  72,860
  83,306
  94,471
  106,340
  118,895
  132,123
  146,013
  160,559
  175,757
  191,609
  208,120
  225,302
  243,168
  261,739
  281,038
  301,093
  321,935
  343,602
  366,133
  389,570
  413,962
  439,359
Revenue / Adjusted assets
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
Average production assets, $m
  11,429
  14,754
  18,692
  23,275
  28,528
  34,465
  41,093
  48,411
  56,412
  65,085
  74,416
  84,390
  94,991
  106,207
  118,023
  130,431
  143,425
  157,001
  171,161
  185,911
  201,259
  217,218
  233,807
  251,047
  268,961
  287,580
  306,934
  327,060
  347,997
  369,786
  392,473
Working capital, $m
  -161
  52
  66
  82
  100
  121
  144
  170
  198
  229
  261
  296
  334
  373
  415
  458
  504
  552
  601
  653
  707
  763
  821
  882
  945
  1,010
  1,078
  1,149
  1,222
  1,299
  1,379
Total debt, $m
  4,950
  7,015
  9,550
  12,500
  15,881
  19,703
  23,969
  28,680
  33,830
  39,412
  45,419
  51,839
  58,663
  65,882
  73,489
  81,476
  89,839
  98,578
  107,693
  117,187
  127,067
  137,340
  148,018
  159,115
  170,646
  182,631
  195,089
  208,044
  221,521
  235,546
  250,150
Total liabilities, $m
  7,432
  9,497
  12,032
  14,982
  18,363
  22,185
  26,451
  31,162
  36,312
  41,894
  47,901
  54,321
  61,145
  68,364
  75,971
  83,958
  92,321
  101,060
  110,175
  119,669
  129,549
  139,822
  150,500
  161,597
  173,128
  185,113
  197,571
  210,526
  224,003
  238,028
  252,632
Total equity, $m
  5,439
  7,019
  8,893
  11,074
  13,573
  16,398
  19,551
  23,033
  26,839
  30,965
  35,405
  40,150
  45,194
  50,530
  56,152
  62,056
  68,238
  74,697
  81,434
  88,451
  95,753
  103,347
  111,239
  119,441
  127,964
  136,823
  146,031
  155,606
  165,567
  175,934
  186,728
Total liabilities and equity, $m
  12,871
  16,516
  20,925
  26,056
  31,936
  38,583
  46,002
  54,195
  63,151
  72,859
  83,306
  94,471
  106,339
  118,894
  132,123
  146,014
  160,559
  175,757
  191,609
  208,120
  225,302
  243,169
  261,739
  281,038
  301,092
  321,936
  343,602
  366,132
  389,570
  413,962
  439,360
Debt-to-equity ratio
  0.910
  1.000
  1.070
  1.130
  1.170
  1.200
  1.230
  1.250
  1.260
  1.270
  1.280
  1.290
  1.300
  1.300
  1.310
  1.310
  1.320
  1.320
  1.320
  1.320
  1.330
  1.330
  1.330
  1.330
  1.330
  1.330
  1.340
  1.340
  1.340
  1.340
  1.340
Adjusted equity ratio
  0.419
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -187
  -44
  -93
  -152
  -222
  -304
  -397
  -503
  -620
  -750
  -892
  -1,025
  -1,190
  -1,366
  -1,554
  -1,752
  -1,960
  -2,179
  -2,408
  -2,647
  -2,897
  -3,156
  -3,426
  -3,707
  -3,999
  -4,302
  -4,617
  -4,944
  -5,285
  -5,639
  -6,007
Depreciation, amort., depletion, $m
  758
  973
  1,227
  1,523
  1,862
  2,245
  2,672
  3,144
  3,660
  4,220
  4,822
  5,444
  6,128
  6,852
  7,614
  8,415
  9,253
  10,129
  11,043
  11,994
  12,984
  14,014
  15,084
  16,197
  17,352
  18,554
  19,802
  21,101
  22,451
  23,857
  25,321
Funds from operations, $m
  765
  929
  1,134
  1,371
  1,640
  1,941
  2,275
  2,642
  3,040
  3,470
  3,930
  4,420
  4,938
  5,486
  6,061
  6,663
  7,293
  7,950
  8,635
  9,347
  10,088
  10,858
  11,658
  12,490
  13,354
  14,252
  15,185
  16,156
  17,167
  18,219
  19,314
Change in working capital, $m
  -72
  12
  14
  16
  18
  21
  23
  26
  28
  30
  33
  35
  37
  39
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  65
  68
  71
  74
  77
  80
Cash from operations, $m
  837
  917
  1,120
  1,355
  1,621
  1,920
  2,252
  2,616
  3,012
  3,439
  3,897
  4,385
  4,901
  5,446
  6,019
  6,619
  7,247
  7,902
  8,585
  9,295
  10,034
  10,802
  11,600
  12,429
  13,291
  14,186
  15,117
  16,086
  17,093
  18,142
  19,235
Maintenance CAPEX, $m
  0
  -737
  -952
  -1,206
  -1,502
  -1,841
  -2,224
  -2,651
  -3,123
  -3,639
  -4,199
  -4,801
  -5,444
  -6,128
  -6,852
  -7,614
  -8,415
  -9,253
  -10,129
  -11,043
  -11,994
  -12,984
  -14,014
  -15,084
  -16,197
  -17,352
  -18,554
  -19,802
  -21,101
  -22,451
  -23,857
New CAPEX, $m
  -562
  -3,325
  -3,938
  -4,583
  -5,253
  -5,937
  -6,628
  -7,318
  -8,001
  -8,673
  -9,331
  -9,974
  -10,602
  -11,215
  -11,816
  -12,408
  -12,994
  -13,576
  -14,160
  -14,749
  -15,348
  -15,960
  -16,589
  -17,239
  -17,915
  -18,619
  -19,355
  -20,126
  -20,936
  -21,789
  -22,687
Cash from investing activities, $m
  -559
  -4,062
  -4,890
  -5,789
  -6,755
  -7,778
  -8,852
  -9,969
  -11,124
  -12,312
  -13,530
  -14,775
  -16,046
  -17,343
  -18,668
  -20,022
  -21,409
  -22,829
  -24,289
  -25,792
  -27,342
  -28,944
  -30,603
  -32,323
  -34,112
  -35,971
  -37,909
  -39,928
  -42,037
  -44,240
  -46,544
Free cash flow, $m
  278
  -3,145
  -3,769
  -4,435
  -5,133
  -5,858
  -6,600
  -7,353
  -8,112
  -8,873
  -9,633
  -10,390
  -11,145
  -11,898
  -12,649
  -13,403
  -14,161
  -14,927
  -15,705
  -16,497
  -17,308
  -18,142
  -19,003
  -19,895
  -20,821
  -21,785
  -22,791
  -23,843
  -24,944
  -26,098
  -27,310
Issuance/(repayment) of debt, $m
  -1,105
  2,139
  2,535
  2,950
  3,381
  3,822
  4,266
  4,710
  5,150
  5,583
  6,006
  6,420
  6,824
  7,219
  7,606
  7,987
  8,364
  8,739
  9,115
  9,494
  9,879
  10,273
  10,678
  11,097
  11,531
  11,985
  12,458
  12,955
  13,477
  14,025
  14,603
Issuance/(repurchase) of shares, $m
  1,568
  1,624
  1,966
  2,332
  2,721
  3,128
  3,550
  3,984
  4,427
  4,877
  5,332
  5,770
  6,234
  6,702
  7,176
  7,655
  8,142
  8,638
  9,145
  9,665
  10,199
  10,749
  11,319
  11,909
  12,522
  13,160
  13,825
  14,520
  15,246
  16,005
  16,800
Cash from financing (excl. dividends), $m  
  220
  3,763
  4,501
  5,282
  6,102
  6,950
  7,816
  8,694
  9,577
  10,460
  11,338
  12,190
  13,058
  13,921
  14,782
  15,642
  16,506
  17,377
  18,260
  19,159
  20,078
  21,022
  21,997
  23,006
  24,053
  25,145
  26,283
  27,475
  28,723
  30,030
  31,403
Total cash flow (excl. dividends), $m
  499
  618
  732
  848
  969
  1,092
  1,217
  1,342
  1,465
  1,586
  1,705
  1,800
  1,913
  2,024
  2,132
  2,239
  2,345
  2,450
  2,555
  2,662
  2,770
  2,880
  2,994
  3,111
  3,233
  3,360
  3,493
  3,632
  3,778
  3,932
  4,094
Retained Cash Flow (-), $m
  -3,978
  -1,624
  -1,966
  -2,332
  -2,721
  -3,128
  -3,550
  -3,984
  -4,427
  -4,877
  -5,332
  -5,770
  -6,234
  -6,702
  -7,176
  -7,655
  -8,142
  -8,638
  -9,145
  -9,665
  -10,199
  -10,749
  -11,319
  -11,909
  -12,522
  -13,160
  -13,825
  -14,520
  -15,246
  -16,005
  -16,800
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -1,006
  -1,235
  -1,484
  -1,752
  -2,036
  -2,333
  -2,643
  -2,962
  -3,290
  -3,627
  -3,970
  -4,321
  -4,678
  -5,043
  -5,416
  -5,797
  -6,188
  -6,590
  -7,003
  -7,429
  -7,869
  -8,325
  -8,798
  -9,289
  -9,800
  -10,332
  -10,888
  -11,467
  -12,073
  -12,706
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  -933
  -1,055
  -1,159
  -1,240
  -1,294
  -1,320
  -1,318
  -1,288
  -1,233
  -1,157
  -1,065
  -961
  -851
  -739
  -628
  -524
  -427
  -341
  -267
  -203
  -151
  -110
  -78
  -54
  -36
  -23
  -15
  -9
  -5
  -3
Current shareholders' claim on cash, %
  100
  86.3
  75.2
  66.0
  58.4
  52.0
  46.7
  42.1
  38.2
  34.9
  31.9
  29.4
  27.2
  25.2
  23.4
  21.8
  20.4
  19.1
  18.0
  16.9
  15.9
  15.0
  14.2
  13.5
  12.7
  12.1
  11.5
  10.9
  10.4
  9.9
  9.4

Targa Resources Corp. is a midstream energy company in North America. It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products. The Gathering and Processing segment consists of gathering, compressing, dehydrating, treating, conditioning, processing, and marketing natural gas and gathering crude oil. The Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products and provides certain services, such as storing, fractionating, terminalling, transporting and marketing of NGLs and NGL products.

FINANCIAL RATIOS  of  Targa Resources (TRGP)

Valuation Ratios
P/E Ratio -47.2
Price to Sales 1.3
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 10.6
Price to Free Cash Flow 32.1
Growth Rates
Sales Growth Rate 0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.2%
Cap. Spend. - 3 Yr. Gr. Rate -11.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 86%
Total Debt to Equity 91%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.1%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital -2.1%
Ret/ On T. Cap. - 3 Yr. Avg. 0.7%
Return On Equity -5.4%
Return On Equity - 3 Yr. Avg. 21.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 26.4%
Gross Margin - 3 Yr. Avg. 23.8%
EBITDA Margin 11.7%
EBITDA Margin - 3 Yr. Avg. 11.6%
Operating Margin 0.1%
Oper. Margin - 3 Yr. Avg. 3.2%
Pre-Tax Margin -3.9%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin -2.8%
Net Profit Margin - 3 Yr. Avg. -0.2%
Effective Tax Rate 38.8%
Eff/ Tax Rate - 3 Yr. Avg. 6%
Payout Ratio -302.7%

TRGP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TRGP stock intrinsic value calculation we used $6691 million for the last fiscal year's total revenue generated by Targa Resources. The default revenue input number comes from 2016 income statement of Targa Resources. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TRGP stock valuation model: a) initial revenue growth rate of 29.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for TRGP is calculated based on our internal credit rating of Targa Resources, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Targa Resources.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TRGP stock the variable cost ratio is equal to 97.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TRGP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.1% for Targa Resources.

Corporate tax rate of 27% is the nominal tax rate for Targa Resources. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TRGP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TRGP are equal to 170.8%.

Life of production assets of 15.5 years is the average useful life of capital assets used in Targa Resources operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TRGP is equal to 0.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5439 million for Targa Resources - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 214.581 million for Targa Resources is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Targa Resources at the current share price and the inputted number of shares is $10.3 billion.

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COMPANY NEWS

▶ Houston midstream cos. form JV to build gas processing plant   [Jan-26-18 09:25AM  American City Business Journals]
▶ Barclays Upgraded Targa Resources   [Jan-25-18 02:45PM  Market Realist]
▶ Is Enbridge Inc. a Buy in 2018?   [Jan-24-18 12:09PM  Motley Fool]
▶ Targa Resources Corp. Announces Quarterly Dividends   [Jan-18-18 06:09PM  GlobeNewswire]
▶ Kinder Morgan, joint venture partners to move forward on $1.7B pipeline project   [Dec-22-17 09:30AM  American City Business Journals]
▶ Why ONEOK Stock Is Down 10% Year-to-Date   [07:35AM  Market Realist]
▶ Kinder Morgan Is Down 21% Year-to-DateWhat Next?   [Nov-30-17 05:30PM  Market Realist]
▶ How Kinder Morgan Stock Has Performed Compared to Peers   [Nov-24-17 03:00PM  Market Realist]
▶ MLP Rating Updates during Week Ended November 10   [Nov-14-17 03:31PM  Market Realist]
▶ What Could Drive Targa Resources Future Earnings Growth?   [Nov-08-17 09:02AM  Market Realist]
▶ Hurricane Harvey Impacted Targas LPG Export Volumes in 3Q17   [Nov-07-17 10:32AM  Market Realist]
▶ Targa Resources Earnings Grew 13% in 3Q17   [07:34AM  Market Realist]
▶ Targa Resources Corp. Announces Quarterly Dividends   [Oct-18-17 06:06PM  GlobeNewswire]
▶ Targa creates JV for one Texas pipeline, intends to join JV for another   [Oct-06-17 02:05PM  American City Business Journals]
▶ Which Pipeline Company Is the Best Dividend Stock?   [Sep-27-17 02:21PM  Motley Fool]
▶ Is Kinder Morgans Valuation Attractive?   [Sep-25-17 04:36PM  Market Realist]
▶ ONEOK Has Risen 6% since It Acquired ONEOK Partners   [Sep-22-17 11:38AM  Market Realist]
▶ Why I Love TransCanada Corporation   [Aug-16-17 04:42PM  Motley Fool]
▶ [$$] Three Favorites in Midstream, MLPs   [03:03PM  Barrons.com]
Financial statements of TRGP
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