TRGP

We rate Targa Resources Corp. (TRGP) as a Hold with a composite score of 52.4/100 at a current price of $232.28. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (58th percentile) and momentum (55th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (31th percentile) and value (46th percentile) tempers our overall conviction. We assign a No Moat rating (33/100), High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Targa Resources Corp. holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 52.4/100 places it at rank #1630 in our full 7,333-stock universe. With a $35.8B market capitalization, Targa Resources Corp. operates at meaningful scale within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 17%, though momentum at the 55th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 37% (-17.7pp vs sector) narrow to operating margins of 19% (+1.3pp vs sector) and net margins of 11.1%, yielding a gross-to-net conversion rate of 30%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $232.28, Targa Resources Corp. is trading near fair value based on current fundamentals. Our value factor score of 46/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 26.8x (a 59% premium to the sector median of 16.9x), EV/EBITDA of 21.4x (at a premium), P/B of 15.5x, P/S of 3.0x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to Targa Resources Corp.. Key risk factors include significant leverage (545% debt-to-equity). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (545% debt-to-equity). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 54th percentile and quality factor at the 58th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 2.10% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Targa Resources Corp.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 57.9%, and the balance sheet is managed within acceptable parameters (D/E: 545%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Targa Resources Corp. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 2.10% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Targa Resources Corp. receives a Hold rating with a composite score of 52.4/100 (rank #1630 of 7,333). Our quantitative framework assigns a No Moat (33/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 49/100.

Our analysis supports a neutral stance on Targa Resources Corp.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.