Intrinsic value of Targa Resources - TRGP

Previous Close

$55.42

  Intrinsic Value

$4.14

stock screener

  Rating & Target

str. sell

-93%

Previous close

$55.42

 
Intrinsic value

$4.14

 
Up/down potential

-93%

 
Rating

str. sell

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

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  30.90
  28.31
  25.98
  23.88
  21.99
  20.29
  18.76
  17.39
  16.15
  15.03
  14.03
  13.13
  12.31
  11.58
  10.93
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
Revenue, $m
  11,539
  14,805
  18,652
  23,106
  28,187
  33,908
  40,270
  47,272
  54,906
  63,161
  72,023
  81,478
  91,512
  102,112
  113,268
  124,972
  137,218
  150,006
  163,338
  177,220
  191,661
  206,675
  222,281
  238,497
  255,349
  272,864
  291,074
  310,011
  329,714
  350,222
Variable operating expenses, $m
  11,372
  14,522
  18,232
  22,528
  27,430
  32,947
  39,084
  45,837
  53,201
  61,162
  69,468
  78,587
  88,265
  98,489
  109,249
  120,538
  132,350
  144,684
  157,543
  170,932
  184,861
  199,342
  214,394
  230,035
  246,289
  263,183
  280,746
  299,012
  318,016
  337,796
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
  11,372
  14,522
  18,232
  22,528
  27,430
  32,947
  39,084
  45,837
  53,201
  61,162
  69,468
  78,587
  88,265
  98,489
  109,249
  120,538
  132,350
  144,684
  157,543
  170,932
  184,861
  199,342
  214,394
  230,035
  246,289
  263,183
  280,746
  299,012
  318,016
  337,796
Operating income, $m
  167
  283
  420
  578
  758
  961
  1,187
  1,435
  1,706
  1,999
  2,555
  2,891
  3,247
  3,623
  4,019
  4,434
  4,869
  5,322
  5,795
  6,288
  6,800
  7,333
  7,887
  8,462
  9,060
  9,681
  10,328
  10,999
  11,699
  12,426
EBITDA, $m
  1,375
  1,764
  2,222
  2,752
  3,358
  4,039
  4,797
  5,631
  6,541
  7,524
  8,580
  9,706
  10,901
  12,164
  13,493
  14,887
  16,346
  17,869
  19,457
  21,111
  22,831
  24,620
  26,479
  28,411
  30,418
  32,504
  34,674
  36,930
  39,277
  41,720
Interest expense (income), $m
  282
  273
  410
  575
  768
  993
  1,249
  1,537
  1,858
  2,211
  2,595
  3,011
  3,458
  3,934
  4,440
  4,974
  5,536
  6,126
  6,743
  7,387
  8,059
  8,758
  9,486
  10,243
  11,029
  11,846
  12,695
  13,578
  14,495
  15,449
  16,442
Earnings before tax, $m
  -106
  -127
  -155
  -191
  -235
  -288
  -351
  -423
  -505
  -596
  -456
  -567
  -687
  -817
  -955
  -1,102
  -1,257
  -1,420
  -1,592
  -1,771
  -1,958
  -2,153
  -2,356
  -2,567
  -2,786
  -3,014
  -3,250
  -3,496
  -3,751
  -4,016
Tax expense, $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
Net income, $m
  -106
  -127
  -155
  -191
  -235
  -288
  -351
  -423
  -505
  -596
  -456
  -567
  -687
  -817
  -955
  -1,102
  -1,257
  -1,420
  -1,592
  -1,771
  -1,958
  -2,153
  -2,356
  -2,567
  -2,786
  -3,014
  -3,250
  -3,496
  -3,751
  -4,016

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  18,823
  24,152
  30,427
  37,693
  45,983
  55,314
  65,694
  77,116
  89,570
  103,036
  117,493
  132,917
  149,286
  166,578
  184,777
  203,869
  223,847
  244,708
  266,457
  289,102
  312,660
  337,154
  362,611
  389,065
  416,557
  445,130
  474,835
  505,728
  537,870
  571,325
Adjusted assets (=assets-cash), $m
  18,823
  24,152
  30,427
  37,693
  45,983
  55,314
  65,694
  77,116
  89,570
  103,036
  117,493
  132,917
  149,286
  166,578
  184,777
  203,869
  223,847
  244,708
  266,457
  289,102
  312,660
  337,154
  362,611
  389,065
  416,557
  445,130
  474,835
  505,728
  537,870
  571,325
Revenue / Adjusted assets
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
  0.613
Average production assets, $m
  14,573
  18,699
  23,557
  29,183
  35,601
  42,825
  50,861
  59,705
  69,347
  79,773
  90,965
  102,907
  115,580
  128,968
  143,058
  157,839
  173,307
  189,458
  206,296
  223,828
  242,068
  261,031
  280,740
  301,222
  322,506
  344,628
  367,626
  391,544
  416,429
  442,330
Working capital, $m
  -173
  -222
  -280
  -347
  -423
  -509
  -604
  -709
  -824
  -947
  -1,080
  -1,222
  -1,373
  -1,532
  -1,699
  -1,875
  -2,058
  -2,250
  -2,450
  -2,658
  -2,875
  -3,100
  -3,334
  -3,577
  -3,830
  -4,093
  -4,366
  -4,650
  -4,946
  -5,253
Total debt, $m
  7,592
  10,640
  14,229
  18,385
  23,127
  28,465
  34,402
  40,935
  48,059
  55,761
  64,031
  72,853
  82,216
  92,107
  102,517
  113,438
  124,865
  136,798
  149,238
  162,191
  175,666
  189,677
  204,238
  219,370
  235,095
  251,439
  268,430
  286,101
  304,486
  323,622
Total liabilities, $m
  10,767
  13,815
  17,404
  21,560
  26,302
  31,640
  37,577
  44,111
  51,234
  58,937
  67,206
  76,029
  85,391
  95,283
  105,692
  116,613
  128,041
  139,973
  152,413
  165,366
  178,842
  192,852
  207,414
  222,545
  238,270
  254,614
  271,606
  289,277
  307,661
  326,798
Total equity, $m
  8,056
  10,337
  13,023
  16,133
  19,681
  23,675
  28,117
  33,006
  38,336
  44,100
  50,287
  56,889
  63,894
  71,295
  79,085
  87,256
  95,807
  104,735
  114,043
  123,736
  133,819
  144,302
  155,198
  166,520
  178,286
  190,516
  203,229
  216,452
  230,208
  244,527
Total liabilities and equity, $m
  18,823
  24,152
  30,427
  37,693
  45,983
  55,315
  65,694
  77,117
  89,570
  103,037
  117,493
  132,918
  149,285
  166,578
  184,777
  203,869
  223,848
  244,708
  266,456
  289,102
  312,661
  337,154
  362,612
  389,065
  416,556
  445,130
  474,835
  505,729
  537,869
  571,325
Debt-to-equity ratio
  0.940
  1.030
  1.090
  1.140
  1.180
  1.200
  1.220
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
  1.310
  1.320
  1.320
  1.320
  1.320
  1.320
  1.320
  1.320
  1.320
Adjusted equity ratio
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428
  0.428

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -106
  -127
  -155
  -191
  -235
  -288
  -351
  -423
  -505
  -596
  -456
  -567
  -687
  -817
  -955
  -1,102
  -1,257
  -1,420
  -1,592
  -1,771
  -1,958
  -2,153
  -2,356
  -2,567
  -2,786
  -3,014
  -3,250
  -3,496
  -3,751
  -4,016
Depreciation, amort., depletion, $m
  1,207
  1,481
  1,802
  2,175
  2,600
  3,078
  3,611
  4,196
  4,835
  5,525
  6,024
  6,815
  7,654
  8,541
  9,474
  10,453
  11,477
  12,547
  13,662
  14,823
  16,031
  17,287
  18,592
  19,948
  21,358
  22,823
  24,346
  25,930
  27,578
  29,293
Funds from operations, $m
  1,102
  1,354
  1,647
  1,984
  2,365
  2,790
  3,260
  3,774
  4,330
  4,929
  5,569
  6,248
  6,967
  7,724
  8,519
  9,351
  10,220
  11,126
  12,070
  13,052
  14,073
  15,134
  16,236
  17,382
  18,572
  19,809
  21,096
  22,434
  23,827
  25,277
Change in working capital, $m
  -41
  -49
  -58
  -67
  -76
  -86
  -95
  -105
  -115
  -124
  -133
  -142
  -151
  -159
  -167
  -176
  -184
  -192
  -200
  -208
  -217
  -225
  -234
  -243
  -253
  -263
  -273
  -284
  -296
  -308
Cash from operations, $m
  1,143
  1,403
  1,705
  2,051
  2,441
  2,876
  3,355
  3,879
  4,445
  5,053
  5,701
  6,390
  7,118
  7,883
  8,686
  9,527
  10,404
  11,318
  12,270
  13,260
  14,290
  15,359
  16,470
  17,625
  18,825
  20,072
  21,369
  22,718
  24,123
  25,585
Maintenance CAPEX, $m
  -737
  -965
  -1,238
  -1,560
  -1,933
  -2,358
  -2,836
  -3,368
  -3,954
  -4,593
  -5,283
  -6,024
  -6,815
  -7,654
  -8,541
  -9,474
  -10,453
  -11,477
  -12,547
  -13,662
  -14,823
  -16,031
  -17,287
  -18,592
  -19,948
  -21,358
  -22,823
  -24,346
  -25,930
  -27,578
New CAPEX, $m
  -3,441
  -4,126
  -4,858
  -5,626
  -6,418
  -7,225
  -8,036
  -8,844
  -9,642
  -10,426
  -11,193
  -11,942
  -12,673
  -13,388
  -14,090
  -14,782
  -15,467
  -16,151
  -16,838
  -17,532
  -18,239
  -18,963
  -19,709
  -20,481
  -21,284
  -22,122
  -22,998
  -23,918
  -24,884
  -25,902
Cash from investing activities, $m
  -4,178
  -5,091
  -6,096
  -7,186
  -8,351
  -9,583
  -10,872
  -12,212
  -13,596
  -15,019
  -16,476
  -17,966
  -19,488
  -21,042
  -22,631
  -24,256
  -25,920
  -27,628
  -29,385
  -31,194
  -33,062
  -34,994
  -36,996
  -39,073
  -41,232
  -43,480
  -45,821
  -48,264
  -50,814
  -53,480
Free cash flow, $m
  -3,036
  -3,688
  -4,391
  -5,135
  -5,910
  -6,706
  -7,517
  -8,333
  -9,151
  -9,966
  -10,774
  -11,576
  -12,370
  -13,159
  -13,944
  -14,729
  -15,516
  -16,310
  -17,115
  -17,934
  -18,773
  -19,635
  -20,526
  -21,449
  -22,408
  -23,408
  -24,452
  -25,546
  -26,692
  -27,895
Issuance/(repayment) of debt, $m
  2,539
  3,048
  3,589
  4,156
  4,742
  5,338
  5,937
  6,534
  7,123
  7,703
  8,269
  8,823
  9,363
  9,891
  10,410
  10,921
  11,427
  11,933
  12,440
  12,953
  13,475
  14,010
  14,561
  15,132
  15,725
  16,344
  16,991
  17,671
  18,385
  19,136
Issuance/(repurchase) of shares, $m
  2,002
  2,408
  2,841
  3,301
  3,783
  4,282
  4,793
  5,312
  5,835
  6,360
  6,643
  7,168
  7,693
  8,218
  8,744
  9,273
  9,808
  10,349
  10,900
  11,463
  12,041
  12,636
  13,251
  13,889
  14,552
  15,243
  15,964
  16,718
  17,507
  18,335
Cash from financing (excl. dividends), $m  
  4,541
  5,456
  6,430
  7,457
  8,525
  9,620
  10,730
  11,846
  12,958
  14,063
  14,912
  15,991
  17,056
  18,109
  19,154
  20,194
  21,235
  22,282
  23,340
  24,416
  25,516
  26,646
  27,812
  29,021
  30,277
  31,587
  32,955
  34,389
  35,892
  37,471
Total cash flow (excl. dividends), $m
  1,504
  1,768
  2,038
  2,322
  2,615
  2,913
  3,213
  3,512
  3,807
  4,097
  4,138
  4,415
  4,686
  4,950
  5,209
  5,465
  5,719
  5,971
  6,225
  6,482
  6,744
  7,011
  7,287
  7,573
  7,869
  8,179
  8,503
  8,843
  9,200
  9,576
Retained Cash Flow (-), $m
  -2,002
  -2,408
  -2,841
  -3,301
  -3,783
  -4,282
  -4,793
  -5,312
  -5,835
  -6,360
  -6,643
  -7,168
  -7,693
  -8,218
  -8,744
  -9,273
  -9,808
  -10,349
  -10,900
  -11,463
  -12,041
  -12,636
  -13,251
  -13,889
  -14,552
  -15,243
  -15,964
  -16,718
  -17,507
  -18,335
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
  -497
  -640
  -802
  -979
  -1,168
  -1,369
  -1,580
  -1,800
  -2,028
  -2,263
  -2,505
  -2,753
  -3,007
  -3,268
  -3,535
  -3,808
  -4,089
  -4,377
  -4,675
  -4,981
  -5,297
  -5,625
  -5,964
  -6,317
  -6,683
  -7,064
  -7,461
  -7,875
  -8,307
  -8,758
Discount rate, %
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
  -464
  -552
  -636
  -707
  -763
  -802
  -822
  -823
  -807
  -774
  -728
  -671
  -606
  -537
  -467
  -397
  -331
  -270
  -216
  -169
  -129
  -96
  -70
  -49
  -34
  -23
  -15
  -9
  -6
  -3
Current shareholders' claim on cash, %
  86.2
  75.1
  66.2
  58.8
  52.7
  47.6
  43.3
  39.6
  36.4
  33.7
  31.4
  29.3
  27.5
  25.8
  24.4
  23.0
  21.8
  20.7
  19.7
  18.8
  17.9
  17.1
  16.4
  15.7
  15.0
  14.4
  13.9
  13.3
  12.8
  12.3

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 -54.7
Price to Sales 1.5
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 37.2
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 $8814.9 million for the last fiscal year's total revenue generated by Targa Resources. The default revenue input number comes from 0001 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 30.9% 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 7.3%, 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 99.2%.

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 5.4% 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 126.3%.

Life of production assets of 15.1 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 -1.5%. 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 - $6160.3 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 225.559 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 $12.5 billion.

RELATED COMPANIES Price Int.Val. Rating
OKE ONEOK 65.02 19.21  str.sell
KMI Kinder Morgan 17.51 13.81  sell

COMPANY NEWS

▶ 3 Oil and Gas Stocks With High Forward Dividends   [Oct-10-18 03:31PM  GuruFocus.com]
▶ 5 Companies Hit 52-Week Highs   [Oct-09-18 12:56PM  GuruFocus.com]
▶ 4 Energy Stocks T. Boone Pickens' BP Capital Keeps Buying   [Sep-25-18 06:04PM  GuruFocus.com]
▶ [$$] ArcLight Buys $160 Million of Petroleum Logistics Assets from Targa   [Sep-12-18 04:13PM  The Wall Street Journal]
▶ 5 High-Yield Dividend Stocks to Watch   [Sep-09-18 09:39AM  Motley Fool]
▶ 5 things to know in Texas energy this week   [Aug-06-18 02:01PM  American City Business Journals]
▶ Targa Resources Corp. Announces Quarterly Dividends   [Jul-18-18 06:26PM  GlobeNewswire]
▶ This High-Yield Stock Has Big-Time Upside Potential   [Jul-17-18 10:17AM  Motley Fool]
▶ Heres how much Houston public companies spent on litigation in 2017   [Jun-20-18 06:00AM  American City Business Journals]
▶ This High-Yield Stock Was Just Too Cheap Not to Buy   [Mar-25-18 03:07PM  Motley Fool]
▶ 7 Cheap Energy Stocks That Can Soar   [Mar-01-18 12:45PM  Investopedia]
▶ 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]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.