Targa stock (TRGP) leaves no mark despite third quarter results

Actions of Targa Resources Corp. TRGP has shown no significant changes since the release of third quarter 2021 results on November 4.

Despite the increase in TRGP’s Adjusted EBITDA forecast for 2021 due to excellent business performance and its plan to maximize returns on capital for its shareholders by increasing dividends and share buybacks, the stock did not show an upward trend.

Behind the titles of the results

Targa Resources reported adjusted net earnings per share of 66 cents in the third quarter of 2021, beating the Zacks consensus estimate of 41 cents and increasing 312.5% ​​year-over-year, due to the increase commodity prices and increased Permian volumes across Targa collection and processing, as well as logistics and transportation. systems during the third trimester.

Adjusted EBITDA fell from $ 419.1 million a year earlier to $ 505.9 million in the third quarter of 2021.

Total revenue of $ 4.5 billion was 110.9% above last year’s quarter level and also topped Zacks’ consensus estimate of $ 3.62 billion.

Targa Resources, Inc. Price, Consensus, and Surprise EPS

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

Operational performance

The Collection and Processing segment recorded an operating margin of $ 361.4 million in the quarter, up 38% from the $ 261 million achieved in the prior year period . In addition, the Permian Basin’s volumes increased year over year to reach 2,951.9 million cubic feet per day.

In the Logistics and Transportation (or downstream) segment, the company reported an operating margin of $ 280.7 million, up slightly year-over-year. Targa Resources saw pipeline throughput increase from 300.9 thousand barrels per day (mbpd) to 416.5 mbpd, up 38% year-on-year. However, export volumes were down 5% year over year, while sales of natural gas liquids increased 18% year over year.

DCF, Capex & Balance sheet

Distributable Cash Flow (DCF) for the third quarter of 2021 was $ 383.9 million, up 30.3% from $ 294.7 million in the prior year period. Targa Resources paid a dividend of 10 cents per share.

As of September 30, 2020, TRGP had $ 228.6 million in cash and cash equivalents and $ 6.43 billion in long-term debt. The debt-to-capitalization ratio was 52.5%.


For 2021, Targa Resources projects its forecast for capital spending to drive growth to be around $ 450 million. Full-year maintenance investments are reiterated at around $ 120 million.

Given the strong business performance of the energy player as well as a more bullish commodity price estimate for the remaining year, Targa Resources expects 2021 Adjusted EBITDA to exceed the upper end of the range. previous range of $ 1.9 billion to $ 2 billion.

Targa Resources proposes to recommend to its board of directors an increase in its common dividend to 35 cents per common share or $ 1.40, annually, for the fourth quarter of 2021. The suggested increase in the common dividend per share is expected to take effect in the fourth quarter quarter 2021 and be paid in February 2022.

Zacks rank and choice of keys

Targa Resources currently holds a Zacks Rank # 3 (Hold). Some better ranked players in the energy space are EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each currently displaying a Rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

EOG Resources reported adjusted earnings per share of $ 2.16 in the third quarter of 2021, beating Zacks’ consensus estimate of $ 2.01. Strong profits are attributable to increased production volumes and better realization of raw material prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an increase of 82% from the previous level. The dividend will be paid on January 28, 2022 to its shareholders of record on January 14, 2022. EOG Resources also declared a special dividend of $ 2 per share. In addition, the board of directors increased its authorization to buy back shares to $ 5 billion.

Diamondback Energy reported adjusted third quarter 2021 earnings of $ 2.94 per share, beating Zacks’ consensus estimate of $ 2.81 and last year’s quarter profit by 62 cents. FANG’s bottom line was supported by better than expected production.

The board declared a dividend of 50 cents per share for the third quarter, raising the level 11.1% from the previous payment of 45 cents. The amount will be paid on November 18, 2021 to its shareholders of record on November 11. FANG also generated free cash flow of $ 740 million in the third quarter.

ConocoPhillips reported adjusted third quarter 2021 earnings per share of $ 1.77, comfortably beating Zacks’ consensus estimate of $ 1.53. This outperformance is due to the increase in production volumes due to the acquisition of Concho and to the increase in realized raw material prices.

Based in Houston, Texas, capital expenditures and investments for one of the world’s largest independent oil and gas producers totaled $ 1.3 billion, and dividend payments grossed $ 579 million . ConocoPhillips net cash from operating activities was recorded at $ 4.8 billion, up from $ 868 million a year ago. COP generated free cash flow of $ 2.8 billion in the third quarter.

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