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View the full Nov 11, 2026 version

Price: $281.32
Discount category: Close to intrinsic value
Intrinsic value source: AI estimate
Next earnings: Feb 5, 2027
Next earnings is estimate: Yes
Company name: added: Targa Resources
Sector: added: Midstream: natural gas processing and natural gas liquids
About: added: Targa Resources (Targa) gathers and processes natural gas and transports, fractionates, stores, sells and exports natural gas liquids (NGLs). It reports two segments. Gathering and Processing has plants and pipelines in the Permian Basin of West Texas and Southeast New Mexico and in other basins in Texas, Oklahoma, North Dakota and Louisiana. Logistics and Transportation has NGL pipelines, fractionators in Mont Belvieu, Texas, and LPG export facilities at Galena Park, Texas. In Q3 2026, natural gas inlet volumes in the Permian were a record 7,537 million cubic feet per day, NGL pipeline transportation volumes 1,172 thousand barrels per day and fractionation volumes 1,262 thousand barrels per day. In 2025, adjusted EBITDA was a record $4,957 million. Its shares trade on the New York Stock Exchange. The head office is in Houston.
Thesis: added: Targa trades close to the AI estimate because investors pay for its fast growth in the Permian Basin and its fast-growing dividend, but they also see its high spending and its exposure to commodity prices. Adjusted EBITDA rose 18% to $1,504 million in Q3 2026, and Targa expects at least $6.0 billion for 2026, after $4,957 million in 2025. Net growth capital expenditures are about $5.0 billion in 2026. For the value to grow, three things must be true. Permian production must keep growing, so that the new plants for ExxonMobil and other customers fill. The new projects, such as the Speedway NGL Pipeline and Trains 13 and 14 in Mont Belvieu, must start on time and on budget. Free cash flow must grow enough to pay the planned 2027 dividend of $6.00 per share without much more debt. The Q4 2026 report and the 2027 outlook, expected in February 2027, are the next test. A fall in Permian drilling or lower NGL prices can slow the growth.
Valuation: added: The intrinsic value for Targa Resources is an AI estimate from November 11, 2026. It is not an analyst's value. An AI research agent calculated it from Targa's filings. The method is a multiple of diluted EPS for 2027. The Q3 2026 release (8-K, November 5, 2026) gives net income attributable to Targa of $658 million, or $3.04 per diluted share, for Q3 2026, and its reconciliation of the adjusted EBITDA outlook of at least $6.0 billion for 2026 gives estimated net income attributable to Targa of $2,490 million for 2026. The Form 10-Q for the quarter ended September 30, 2026 gives diluted EPS of $8.79 for the first nine months of 2026 and 215.2 million diluted shares for Q3 2026. So the estimate takes EPS of about $11.57 for 2026. EPS is after interest, so the estimate makes no debt adjustment. EPS for 2027 and the multiples are assumptions. The low case assumes that Permian growth slows and NGL margins fall, with EPS of $11.50, at 17 times. It gives $195.50 per share. The base case assumes growth from the new plants and fractionators, with EPS of $13.50, at 20 times. It gives $270.00 per share. The high case assumes strong Permian growth and the new ExxonMobil volumes, with EPS of $15.00, at 23 times. It gives $345.00 per share. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is $270.13 per share. Efficient scale and switching costs are the main sources of the advantage. Targa's plants, NGL pipelines and fractionators form a connected system from the Permian wellhead to Mont Belvieu and the export dock, and some contracts are fee-based and long term, such as the 20-year agreements with ExxonMobil of August 2026. But other midstream companies build competing plants and pipelines in the Permian, and part of the margin depends on commodity prices. The estimate expects the advantage to last 10 years or more, but not 20 years. As of Nov 11, 2026.
Risks: added: Growth depends on oil and gas drilling in the Permian Basin. Lower oil prices can slow drilling and leave new plants and pipelines with less volume than planned. Part of the margin depends on commodity prices and spreads, mainly in Gathering and Processing and in marketing. In Q3 2026, lower marketing margin and lower LPG export margin reduced adjusted EBITDA by 6% from Q2 2026. Targa spends about $5.0 billion on growth projects in 2026. Delays or higher costs on the new plants, pipelines and fractionators can lower returns and raise debt. Other midstream companies compete for Permian volumes, NGL transportation and fractionation. LPG exports depend on foreign demand and trade policy. Tariffs or trade disputes can reduce export volumes and fees.
Balance sheet: added: Cash: $143M Debt: $19.8B Net debt: $19.7B Undrawn credit line: $2.6B Debt due within 12 months: $563M Last debt due: 2056 Targa funds itself with senior unsecured notes, commercial paper, a revolving credit facility and cash flow. At September 30, 2026, total consolidated debt was $19.8 billion, net of issuance costs and discount: $17.9 billion of senior unsecured notes, $860 million of commercial paper, $451 million under the accounts receivable securitization facility and $796 million of finance lease liabilities. Of this, $563 million was current. Cash was $143 million. Liquidity was about $2.9 billion, including $2.6 billion available under the TRGP Revolver and $149 million under the securitization facility. On March 2, 2026, Targa issued $1.5 billion of senior notes due 2031 and 2056. Targa bought back shares for $52 million in Q3 2026, and $1,187 million of repurchase authorization was left at September 30, 2026. There were 214,554,011 shares on October 30, 2026. The quarterly dividend is $1.25 per share. As of Sep 30, 2026.
Checkpoints: added: Nov 5, 2026: Q3 2026 results and the 2026 outlook. Passed. Watch: Higher adjusted EBITDA and a kept or higher 2026 outlook pass; a lower outlook fails. Outcome: Adjusted EBITDA rose 18% to $1,504 million, and Targa raised its 2026 outlook to at least $6.0 billion. Feb 5, 2027 (estimate): Q4 2026 results and the 2027 outlook. Pending. Watch: 2026 adjusted EBITDA of $6.0 billion or more and a 2027 outlook for higher EBITDA pass; a lower outlook fails. Q3 2027 (estimate): Start of the Yeti and Yeti II plants. Pending. Watch: Yeti in Q2 2027 and Yeti II in Q3 2027, as planned, pass; delays fail.
Recent events: added: Nov 5, 2026: Targa reported Q3 2026 results. Net income attributable to Targa rose to $658 million, or $3.04 per diluted share, from $478 million, and adjusted EBITDA rose 18% to $1,504 million. Permian inlet, NGL transportation and fractionation volumes were records. Targa now expects 2026 adjusted EBITDA of at least $6.0 billion, and it expects to recommend a 2027 annual dividend of $6.00 per share, 20% more than in 2026. It will build Train 14, a new 150 thousand barrels per day fractionator in Mont Belvieu, which is expected to start in Q1 2029. In August 2026, Targa signed 20-year, fee-based agreements with subsidiaries of ExxonMobil for gathering, processing and downstream services in the Permian Basin, and it announced three new processing plants in the Permian Delaware to serve them. Aug 20, 2026: Targa appointed Brent B. Secrest, a former Chief Commercial Officer of Enterprise Products, as President of Logistics and Transportation from September 1, 2026. Aug 6, 2026: Targa reported Q2 2026 results. Net income attributable to Targa was $765 million, and adjusted EBITDA rose 38% to a record $1,603 million. Train 11 and the Delaware Express NGL Pipeline expansion started operations. Mar 2, 2026: Targa issued $750 million of 4.350% senior notes due 2031 and $750 million of 6.050% senior notes due 2056. Feb 19, 2026: Targa reported 2025 results. Net income attributable to Targa was $1,923 million, and adjusted EBITDA rose 20% to a record $4,957 million. It completed the purchase of Stakeholder Midstream in January 2026 and expected 2026 adjusted EBITDA of $5.4 to $5.6 billion.