Yahoo Finance Targa's (TRGP) Q1 Earnings & Revenues Miss Estimates
Targa Resources TRGP reported first-quarter 2023 earnings of 3 cents per share, which missed the Zacks Consensus Estimate of $1.43. The bottom line also deteriorated from the year-ago quarter’s level of 6 cents. The underperformance could be attributed to lower commodity sales and expenses related to TRGP's acquisition of its remaining stake in the Grand Prix NGL pipeline.
The company’s adjusted EBITDA for the first quarter totaled $940.6 million, up from $625.8 million in the prior-year period.
Distributable cash flow amounted to $729.4 million, about 47.5% higher than $494.6 million recorded a year ago.
Revenues totaled $4.5 billion, down 8.8% year over year. The top line also missed the Zacks Consensus Estimate of $5.7 billion.
Targa increased its quarterly cash dividend to 50 cents per common share, or $2.00 on an annualized basis, for the first quarter of 2023.
Targa Resources, Inc. Price, Consensus and EPS Surprise
Targa Resources, Inc. price-consensus-eps-surprise-chart | Targa Resources, Inc. Quote
Operational Performance
Gathering and Processing: The segment recorded an operating margin of $538.4 million during the quarter, up 35.4% from $397.6 million in the year-ago period.
The jump primarily reflects higher Permian Basin volumes that increased 58.7% year over year to an average of 4,843.7 million cubic feet per day.
Logistics and Transportation: This unit mainly reflects the company’s downstream operations. Operating margin of $529.1 million increased 50.3% year over year.
The rise in adjusted operating margin was due to various factors, including increased marketing margin, greater volumes of pipeline transportation and fractionation, and higher LPG export volumes. The higher marketing margin was a result of increased optimization opportunities.
TRGP’s fractionation volumes totaled 758.8 thousand barrels per day, up 8% from 702.8 recorded a year ago.
NGL pipeline transportation volumes were up 16.8% year over year. NGL sales also improved 15.4%.
Costs, Capex & Balance Sheet
Targa incurred product costs of $3 billion in the first quarter of 2023, down 28.2% from the year-ago quarter’s level.
The company spent $415.4 million on growth capital programs compared with $121.4 million in the year-ago period.
As of Mar 31, 2023, TRGP had cash and cash equivalents of $211.8 million and long-term debt of $12.2 billion, with a debt-to-capitalization of around 73.4%.
Guidance
The company expects adjusted EBITDA in the $3.5-$3.7 billion range for 2023.
It also anticipates 2023 growth capital expenditures between $2 billion and $2.2 billion, with net maintenance capital spending at $175 million.
Zacks Rank and Key Picks
Currently, Targa carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum EPM, sporting a Zacks Rank #1 (Strong Buy), and Archrock AROC and Ranger Energy Services RNGR, both holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays investors $0.48 per share, or 7.38%, on an annual basis.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Evolution Petroleum Corporation, Inc. (EPM) : Free Stock Analysis Report
Targa Resources, Inc. (TRGP) : Free Stock Analysis Report
Archrock, Inc. (AROC) : Free Stock Analysis Report
Ranger Energy Services, Inc. (RNGR) : Free Stock Analysis Report
