Intrinsic value of Targa Resources - TRGP

Previous Close

$51.63

  Intrinsic Value

$4.51

stock screener

  Rating & Target

str. sell

-91%

Previous close

$51.63

 
Intrinsic value

$4.51

 
Up/down potential

-91%

 
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 2017), $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 10.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  31.70
  29.03
  26.63
  24.46
  22.52
  20.77
  19.19
  17.77
  16.49
  15.34
  14.31
  13.38
  12.54
  11.79
  11.11
  10.50
  9.95
  9.45
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
Revenue, $m
  11,609
  14,980
  18,968
  23,609
  28,925
  34,931
  41,634
  49,033
  57,120
  65,885
  75,313
  85,389
  96,097
  107,424
  119,357
  131,886
  145,005
  158,713
  173,009
  187,899
  203,393
  219,505
  236,252
  253,655
  271,740
  290,536
  310,075
  330,393
  351,529
  373,527
Variable operating expenses, $m
  11,440
  14,690
  18,537
  23,013
  28,141
  33,934
  40,400
  47,536
  55,336
  63,790
  72,641
  82,360
  92,688
  103,613
  115,123
  127,207
  139,861
  153,082
  166,871
  181,233
  196,178
  211,718
  227,871
  244,657
  262,100
  280,229
  299,075
  318,672
  339,058
  360,275
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
  11,440
  14,690
  18,537
  23,013
  28,141
  33,934
  40,400
  47,536
  55,336
  63,790
  72,641
  82,360
  92,688
  103,613
  115,123
  127,207
  139,861
  153,082
  166,871
  181,233
  196,178
  211,718
  227,871
  244,657
  262,100
  280,229
  299,075
  318,672
  339,058
  360,275
Operating income, $m
  170
  289
  431
  595
  784
  997
  1,235
  1,497
  1,784
  2,095
  2,672
  3,029
  3,409
  3,811
  4,234
  4,679
  5,144
  5,630
  6,138
  6,666
  7,216
  7,787
  8,381
  8,999
  9,640
  10,307
  11,000
  11,721
  12,471
  13,251
EBITDA, $m
  2,019
  2,605
  3,298
  4,105
  5,029
  6,074
  7,239
  8,526
  9,932
  11,456
  13,095
  14,847
  16,709
  18,678
  20,753
  22,932
  25,213
  27,596
  30,082
  32,671
  35,365
  38,167
  41,079
  44,105
  47,249
  50,517
  53,915
  57,447
  61,122
  64,947
Interest expense (income), $m
  282
  273
  413
  583
  784
  1,018
  1,286
  1,589
  1,926
  2,299
  2,707
  3,148
  3,623
  4,131
  4,671
  5,241
  5,843
  6,474
  7,135
  7,826
  8,546
  9,296
  10,077
  10,889
  11,733
  12,610
  13,521
  14,468
  15,453
  16,476
  17,541
Earnings before tax, $m
  -103
  -124
  -153
  -189
  -234
  -289
  -354
  -429
  -515
  -612
  -477
  -594
  -722
  -860
  -1,007
  -1,164
  -1,330
  -1,505
  -1,688
  -1,880
  -2,081
  -2,290
  -2,508
  -2,734
  -2,970
  -3,214
  -3,468
  -3,732
  -4,006
  -4,290
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
  -103
  -124
  -153
  -189
  -234
  -289
  -354
  -429
  -515
  -612
  -477
  -594
  -722
  -860
  -1,007
  -1,164
  -1,330
  -1,505
  -1,688
  -1,880
  -2,081
  -2,290
  -2,508
  -2,734
  -2,970
  -3,214
  -3,468
  -3,732
  -4,006
  -4,290

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
  18,939
  24,436
  30,943
  38,513
  47,186
  56,984
  67,919
  79,989
  93,182
  107,479
  122,859
  139,297
  156,766
  175,243
  194,709
  215,149
  236,551
  258,911
  282,233
  306,524
  331,800
  358,084
  385,403
  413,793
  443,296
  473,958
  505,832
  538,977
  573,457
  609,342
Adjusted assets (=assets-cash), $m
  18,939
  24,436
  30,943
  38,513
  47,186
  56,984
  67,919
  79,989
  93,182
  107,479
  122,859
  139,297
  156,766
  175,243
  194,709
  215,149
  236,551
  258,911
  282,233
  306,524
  331,800
  358,084
  385,403
  413,793
  443,296
  473,958
  505,832
  538,977
  573,457
  609,342
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
  16,067
  20,732
  26,252
  32,674
  40,032
  48,345
  57,622
  67,862
  79,054
  91,185
  104,233
  118,178
  132,999
  148,675
  165,190
  182,530
  200,688
  219,658
  239,444
  260,052
  281,497
  303,795
  326,973
  351,059
  376,089
  402,102
  429,144
  457,264
  486,516
  516,961
Working capital, $m
  -1,289
  -1,663
  -2,105
  -2,621
  -3,211
  -3,877
  -4,621
  -5,443
  -6,340
  -7,313
  -8,360
  -9,478
  -10,667
  -11,924
  -13,249
  -14,639
  -16,096
  -17,617
  -19,204
  -20,857
  -22,577
  -24,365
  -26,224
  -28,156
  -30,163
  -32,250
  -34,418
  -36,674
  -39,020
  -41,461
Total debt, $m
  7,657
  10,802
  14,524
  18,854
  23,815
  29,419
  35,674
  42,578
  50,124
  58,303
  67,100
  76,502
  86,494
  97,063
  108,198
  119,889
  132,131
  144,922
  158,262
  172,156
  186,614
  201,648
  217,275
  233,514
  250,390
  267,928
  286,160
  305,119
  324,842
  345,368
Total liabilities, $m
  10,833
  13,978
  17,699
  22,030
  26,990
  32,595
  38,850
  45,754
  53,300
  61,478
  70,276
  79,678
  89,670
  100,239
  111,374
  123,065
  135,307
  148,097
  161,437
  175,332
  189,790
  204,824
  220,451
  236,690
  253,565
  271,104
  289,336
  308,295
  328,017
  348,544
Total equity, $m
  8,106
  10,459
  13,244
  16,484
  20,195
  24,389
  29,069
  34,235
  39,882
  46,001
  52,584
  59,619
  67,096
  75,004
  83,336
  92,084
  101,244
  110,814
  120,796
  131,192
  142,010
  153,260
  164,952
  177,104
  189,731
  202,854
  216,496
  230,682
  245,440
  260,798
Total liabilities and equity, $m
  18,939
  24,437
  30,943
  38,514
  47,185
  56,984
  67,919
  79,989
  93,182
  107,479
  122,860
  139,297
  156,766
  175,243
  194,710
  215,149
  236,551
  258,911
  282,233
  306,524
  331,800
  358,084
  385,403
  413,794
  443,296
  473,958
  505,832
  538,977
  573,457
  609,342
Debt-to-equity ratio
  0.940
  1.030
  1.100
  1.140
  1.180
  1.210
  1.230
  1.240
  1.260
  1.270
  1.280
  1.280
  1.290
  1.290
  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
  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
  -103
  -124
  -153
  -189
  -234
  -289
  -354
  -429
  -515
  -612
  -477
  -594
  -722
  -860
  -1,007
  -1,164
  -1,330
  -1,505
  -1,688
  -1,880
  -2,081
  -2,290
  -2,508
  -2,734
  -2,970
  -3,214
  -3,468
  -3,732
  -4,006
  -4,290
Depreciation, amort., depletion, $m
  1,849
  2,315
  2,867
  3,510
  4,245
  5,077
  6,004
  7,028
  8,148
  9,361
  10,423
  11,818
  13,300
  14,867
  16,519
  18,253
  20,069
  21,966
  23,944
  26,005
  28,150
  30,380
  32,697
  35,106
  37,609
  40,210
  42,914
  45,726
  48,652
  51,696
Funds from operations, $m
  1,746
  2,191
  2,715
  3,321
  4,011
  4,788
  5,651
  6,599
  7,633
  8,749
  9,947
  11,224
  12,578
  14,008
  15,512
  17,089
  18,739
  20,461
  22,256
  24,125
  26,069
  28,090
  30,190
  32,372
  34,639
  36,996
  39,446
  41,995
  44,646
  47,406
Change in working capital, $m
  -310
  -374
  -443
  -515
  -590
  -667
  -744
  -821
  -898
  -973
  -1,047
  -1,118
  -1,189
  -1,257
  -1,325
  -1,391
  -1,456
  -1,521
  -1,587
  -1,653
  -1,720
  -1,788
  -1,859
  -1,932
  -2,007
  -2,086
  -2,169
  -2,255
  -2,346
  -2,442
Cash from operations, $m
  2,056
  2,565
  3,158
  3,836
  4,601
  5,454
  6,395
  7,421
  8,530
  9,722
  10,993
  12,342
  13,767
  15,265
  16,836
  18,480
  20,195
  21,983
  23,843
  25,778
  27,789
  29,878
  32,048
  34,303
  36,647
  39,082
  41,615
  44,250
  46,992
  49,847
Maintenance CAPEX, $m
  -1,220
  -1,607
  -2,073
  -2,625
  -3,267
  -4,003
  -4,834
  -5,762
  -6,786
  -7,905
  -9,118
  -10,423
  -11,818
  -13,300
  -14,867
  -16,519
  -18,253
  -20,069
  -21,966
  -23,944
  -26,005
  -28,150
  -30,380
  -32,697
  -35,106
  -37,609
  -40,210
  -42,914
  -45,726
  -48,652
New CAPEX, $m
  -3,864
  -4,664
  -5,520
  -6,422
  -7,358
  -8,313
  -9,277
  -10,240
  -11,193
  -12,130
  -13,048
  -13,945
  -14,821
  -15,676
  -16,515
  -17,340
  -18,157
  -18,971
  -19,786
  -20,608
  -21,444
  -22,299
  -23,178
  -24,086
  -25,030
  -26,013
  -27,042
  -28,120
  -29,253
  -30,444
Cash from investing activities, $m
  -5,084
  -6,271
  -7,593
  -9,047
  -10,625
  -12,316
  -14,111
  -16,002
  -17,979
  -20,035
  -22,166
  -24,368
  -26,639
  -28,976
  -31,382
  -33,859
  -36,410
  -39,040
  -41,752
  -44,552
  -47,449
  -50,449
  -53,558
  -56,783
  -60,136
  -63,622
  -67,252
  -71,034
  -74,979
  -79,096
Free cash flow, $m
  -3,028
  -3,706
  -4,436
  -5,212
  -6,024
  -6,862
  -7,717
  -8,581
  -9,449
  -10,314
  -11,173
  -12,026
  -12,872
  -13,711
  -14,546
  -15,380
  -16,215
  -17,057
  -17,908
  -18,775
  -19,661
  -20,570
  -21,509
  -22,480
  -23,489
  -24,540
  -25,637
  -26,784
  -27,987
  -29,248
Issuance/(repayment) of debt, $m
  2,604
  3,145
  3,722
  4,330
  4,961
  5,605
  6,255
  6,904
  7,546
  8,178
  8,797
  9,402
  9,992
  10,569
  11,135
  11,691
  12,242
  12,790
  13,340
  13,895
  14,458
  15,034
  15,627
  16,239
  16,875
  17,539
  18,232
  18,959
  19,723
  20,526
Issuance/(repurchase) of shares, $m
  2,049
  2,477
  2,937
  3,429
  3,946
  4,483
  5,034
  5,595
  6,162
  6,731
  7,059
  7,629
  8,199
  8,768
  9,339
  9,912
  10,490
  11,075
  11,670
  12,277
  12,899
  13,539
  14,200
  14,885
  15,597
  16,337
  17,110
  17,918
  18,763
  19,649
Cash from financing (excl. dividends), $m  
  4,653
  5,622
  6,659
  7,759
  8,907
  10,088
  11,289
  12,499
  13,708
  14,909
  15,856
  17,031
  18,191
  19,337
  20,474
  21,603
  22,732
  23,865
  25,010
  26,172
  27,357
  28,573
  29,827
  31,124
  32,472
  33,876
  35,342
  36,877
  38,486
  40,175
Total cash flow (excl. dividends), $m
  1,625
  1,916
  2,223
  2,547
  2,883
  3,226
  3,572
  3,917
  4,259
  4,596
  4,683
  5,005
  5,319
  5,626
  5,927
  6,224
  6,517
  6,809
  7,101
  7,396
  7,696
  8,003
  8,318
  8,645
  8,983
  9,336
  9,705
  10,092
  10,499
  10,927
Retained Cash Flow (-), $m
  -2,049
  -2,477
  -2,937
  -3,429
  -3,946
  -4,483
  -5,034
  -5,595
  -6,162
  -6,731
  -7,059
  -7,629
  -8,199
  -8,768
  -9,339
  -9,912
  -10,490
  -11,075
  -11,670
  -12,277
  -12,899
  -13,539
  -14,200
  -14,885
  -15,597
  -16,337
  -17,110
  -17,918
  -18,763
  -19,649
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
  44
  58
  75
  95
  118
  145
  175
  208
  245
  286
  329
  377
  427
  480
  537
  597
  659
  725
  794
  865
  939
  1,017
  1,098
  1,181
  1,268
  1,359
  1,453
  1,550
  1,652
  1,758
Cash available for distribution, $m
  -424
  -561
  -714
  -882
  -1,063
  -1,257
  -1,462
  -1,678
  -1,902
  -2,135
  -2,376
  -2,624
  -2,880
  -3,142
  -3,411
  -3,688
  -3,973
  -4,266
  -4,569
  -4,880
  -5,203
  -5,536
  -5,882
  -6,241
  -6,613
  -7,001
  -7,405
  -7,825
  -8,264
  -8,722
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  -397
  -489
  -575
  -651
  -715
  -763
  -794
  -808
  -804
  -783
  -748
  -701
  -644
  -580
  -513
  -445
  -378
  -315
  -257
  -205
  -160
  -122
  -91
  -66
  -47
  -32
  -21
  -14
  -9
  -5
Current shareholders' claim on cash, %
  83.9
  71.3
  61.4
  53.4
  47.0
  41.6
  37.2
  33.5
  30.3
  27.6
  25.4
  23.4
  21.7
  20.2
  18.8
  17.6
  16.6
  15.6
  14.7
  13.9
  13.1
  12.4
  11.8
  11.2
  10.7
  10.2
  9.7
  9.3
  8.8
  8.5

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 -51
Price to Sales 1.4
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 11.4
Price to Free Cash Flow 34.7
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 $8815 million for the last fiscal year's total revenue generated by Targa Resources. The default revenue input number comes from 2017 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 31.7% 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 6.8%, 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 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 0.5%.

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 138.4%.

Life of production assets of 10 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 -11.1%. 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 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 207 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 $10.7 billion.

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COMPANY NEWS

▶ 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]
▶ 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]
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