Targa Resources Corp. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Targa Resources Corp. (NYSE:TRGP) just released its third-quarter report and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 7.0% to hit US$2.1b. Statutory earnings per share (EPS) came in at US$0.16, some 8.4% above whatthe analysts had expected. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Targa Resources
Taking into account the latest results, the current consensus from Targa Resources’ eight analysts is for revenues of US$9.51b in 2021, which would reflect a meaningful 17% increase on its sales over the past 12 months. Targa Resources is also expected to turn profitable, with statutory earnings of US$0.68 per share. In the lead-up to this report, the analysts had been modelling revenues of US$8.99b and earnings per share (EPS) of US$0.61 in 2021. So it seems there’s been a definite increase in optimism about Targa Resources’ future following the latest results, with a substantial gain in the earnings per share forecasts in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$23.86, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Targa Resources, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$19.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Targa Resources shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It’s clear from the latest estimates that Targa Resources’ rate of growth is expected to accelerate meaningfully, with the forecast 17% revenue growth noticeably faster than its historical growth of 7.1%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Targa Resources to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Targa Resources following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Targa Resources going out to 2022, and you can see them free on our platform here..
Don’t forget that there may still be risks. For instance, we’ve identified 2 warning signs for Targa Resources (1 can’t be ignored) you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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