Back to top

Image: Bigstock

Targa (TRGP) Stock Up on Q1 Earnings Beat, Solid Guidance

Read MoreHide Full Article

Shares of Targa Resources Corp. (TRGP - Free Report) have gained 5.7% since its first-quarter 2021 earnings announcement on May 6.  

This uptrend was led by the company’s better-than-expected bottom-line performance and its raised adjusted EBITDA guidance for 2021 owing to anexcellent business performance and sustained cost-cutting efforts as well as a more optimistic commodity pricing outlook for the rest of 2021.

Behind the Earnings Headlines

The company reported first-quarter 2021 adjusted net income per share of 53 cents, beating the Zacks Consensus Estimate of 15 cents. This outperformance was aided by strong volumes across the company’s Permian gathering and processing systems and a robust operational performance across its Logistics and Transportation systems. However, the bottom line decreased 22.1% year over year due to increased operating expenses.

The company’s adjusted EBITDA rose from $428.1 million a year earlier to $515.7 million in the first quarter of 2021.

Moreover, total revenues of $3.63 billion were 77.9% higher than the year-ago quarter and also outpaced the Zacks Consensus Estimate of $2.62 billion.

Operational Performance

The Gathering and Processing segment recorded an operating margin of $275.1 million during the quarter, up 7.6% from $255.7 million achieved in the year-ago period. Moreover, Permian Basin volumes marginally increased year over year to 2,395.9 million cubic feet per day.

In the Logistics and Transportation (or the Downstream) segment, the company reported an operating margin of $348.7 million, up 18.6% year over year. Targa Resources saw a pipeline throughput rise from 261.7 thousand barrels per day to 342.5, reflecting a 31% increase year over year. Moreover, export volumes expanded 5% year over year while natural gas liquids sale rose 18% 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

First-quarter 2021 distributable cash flow (DCF) was $397.4 million, 32% higher than $301.9 million in the year-ago period. Targa Resources paid out a dividend of 10 cents per share.

As of Mar 31, 2020, the company had $248.5 million in cash and cash equivalents and $7.1 billion of long-term debt. Debt-to-capitalization was 54%.

Guidance

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

With the energy player’s excellent business performance and consistent cost-cutting efforts as well as a more bullish commodity pricing estimate for the remaining year, it lifts its 2021 adjusted EBITDA view to the $1.80-$1.90 billion band.

Zacks Rank & Key Picks

Targa Resources currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the  energy  space are Whiting Petroleum Corp. , Matador Resources Co. (MTDR - Free Report) and Continental Resources, Inc. , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Matador Resources Company (MTDR) - free report >>

Targa Resources, Inc. (TRGP) - free report >>

Published in