Targa Resources Corp

Targa Resources is a midstream energy corporation and is one of the largest providers of natural gas and natural gas liquids in the US. Their operations are based largely along the Texas and Louisiana Gulf Coast and their headquarters is located in Houston, Texas

Targa Resources Corp owns the general and limited partner interests, including incentive distribution rights (“IDRs”), in Targa Resources Partners, a publicly traded limited partnership that’s a leading provider of midstream natural gas and natural gas liquid services in the US. The company’s IDRs entitle them to receive increasing percentages, up to 48%, of all cash distributed by Targa Resources Partnership. The company’s interests in the Partnership consist of a 2% general partner interest which they hold through their 100% ownership in the general partner of the Partnership (Targa Resources GP LLC), all of the outstanding IDRs, and the common units of the Partnership.

The company’s primary business objective is to increase shareholder dividends by assisting the Partnership in executing its business strategy and generating cash flows from the cash distributions received from the Partnership.

​Targa Resources Corp., through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. The company operates in two divisions, Gathering and Processing, and Logistics and Marketing. It is involved in gathering, compressing, treating, processing, and selling natural gas; storing, fractionating, treating, transporting, terminaling, and selling NGLs and NGL products; gathering, storing, and terminaling crude oil and refined petroleum products. The company also purchases and resells component NGL products; sells propane and provides related logistics services to multi-state retailers, independent retailers, and other end-users; offers NGL balancing services; and provides transportation services to refineries and petrochemical companies in the Gulf Coast area. It operates approximately 11,400 miles of natural gas pipelines, including 12 owned and operated processing plants; and 39 storage wells with a net storage capacity of approximately 64 million barrels. As of December 31, 2014, the company leased and managed approximately 716 railcars; 75 owned and leased transport tractors; and 22 company-owned pressurized NGL barges. Targa Resources Corp. was founded in 2005 and is headquartered in Houston, Texas.
​(Summary) (Company) (Chart)
31 January 2016
Price $22.47
1yr Target $38.29
Analysts 14
Dividend $3.64
Payout Ratio 308.47%

1yr Cap Gain 70.40%
Yield 16.19%
1yr Tot Return 86.59%

EPS (ttm) $1.18
EPS next yr $1.92
EPS next 5yr 3.10%
1yr Price Support $5.95
P/E 19.04
PEG 6.14
Beta 1.84
Market Cap $1.26 Bil
Revenues $7.04 Bil
Earnings $56.90 Bil
Profit Margin 0.80%
1yr EarnGR 56.77%
yr EarnGR 48.04%
5yr EarnGR —
1yr DivGR 29.09%
3yr DivGR 32.88%
5yr DivGR —
Quick Ratio 1.00
Current Ratio 1.20
Debt/Equity 4.10
ROA 0.50%
ROE 5.20%
​My Perspective

It’s hard to see how a company like Targa Resources can sustain their dividend at this level when the company is paying out more than three times its current EPS. That puts the chart of their dividends on the left in jeopardy. I realize that this level of consistent dividend growth is a desirable attribute, but the company’s ability to maintain this growth will probably not continue without taking on additional debt. 

At this point in time I intend to pass on investing in this company. It’s not because this isn’t a great company, it’s because there are so many better investments available for my limited funds. Anyone buying this company would have to be buying it simply for the estimated growth in the company’s stock price. Personally I don’t see this happening but I’ve been wrong before. 

This article, Targa Resources Corp, first appeared on dennismccain – Investing.