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Targa Resources (TRGP) Q4 Earnings Miss Estimates, Rise Y/Y

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Targa Resources Corp. (TRGP - Free Report) reported fourth-quarter 2020 adjusted net income per share of 15 cents, missing the Zacks Consensus Estimate of 23 cents due to increased operating expenses. However, the bottom line increased 7.14% year over year. This outperformance was led by strong volumes across the company’s Permian gathering and processing systems and a strong operational performance across its Logistics and Transportation systems.

The company’s adjusted EBITDA descended from $465.2 million a year earlier to $438.1 million in the fourth quarter of 2020.

Moreover, total revenues of $2.57 billion were 4% higher than the year-ago quarter and also outpaced the Zacks Consensus Estimate of $2.29 billion.

Operational Performance

The Gathering and Processing segment recorded an operating margin of $263.9 million during the quarter, down 8.9% from $289.7 million achieved in the year-ago period. However, Permian Basin volumes increased 9.9% year over year to 2,595.2 million cubic feet per day.

In the Logistics and Transportation (or the Downstream) segment, the company reported an operating margin of $322 million, up 6.6% year over year. Targa Resources saw fractionation volumes rise from 596.7 thousand barrels per day to 632.3, reflecting a 6% increase year over year. Moreover, export volumes expanded 38.3% year over year.

Targa Resources, Inc. Price, Consensus and EPS Surprise

Targa Resources, Inc. Price, Consensus and EPS Surprise

Targa Resources, Inc. price-consensus-eps-surprise-chart | Targa Resources, Inc. Quote

DCF, Capex & Balance Sheet

Fourth-quarter 2020 distributable cash flow (DCF) was $293.9 million, 10.3% lower than $327.8 million in the year-ago period. Targa Resources paid out a dividend of 10 cents per share.

As of Dec 31, 2020, the company had $242.8 million in cash and cash equivalents and $7.39 billion in long-term debt. Debt-to-capitalization was 55.6%.

Guidance

For 2021, Targa Resources projects its growth capital spending guidance in the $350-$450 million range and full-year maintenance capex of nearly $130 million.

With the upstream players starting to restore shut-in volumes in response to higher oil prices, Targa Resources foresees 2021 adjusted EBITDA in the range $1.675-$1.77 billion with the midpoint indicating a 5% rise from the 2020 levels.

Targa Resources anticipates 2021 Permian natural gas inlet volumes to increase 5-10% from the 2020 levels. Further, it expects 2021 average total Field Gathering and Processing natural gas inlet volumes to be flat with the 2020 average. 

Zacks Rank & Other Key Picks

Targa Resources currently carries a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , PDC Energy, Inc. and Denbury Inc. , each presently flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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