NVIDIA Stock – Targa (TRGP) Stock Up on Q1 Earnings Beat, Solid Guidance
Shares of Targa Resources Corp. TRGP have gained 5.7% since its first-quarter 2021 earnings announcement on May 6.
This uptrend was led by the company’s better-than-expected bottom-line performance and its raised adjusted EBITDA guidance for 2021 owing to anexcellent business performance and sustained cost-cutting efforts as well as a more optimistic commodity pricing outlook for the rest of 2021.
Behind the Earnings Headlines
The company reported first-quarter 2021 adjusted net income per share of 53 cents, beating the Zacks Consensus Estimate of 15 cents. This outperformance was aided by strong volumes across the company’s Permian gathering and processing systems and a robust operational performance across its Logistics and Transportation systems. However, the bottom line decreased 22.1% year over year due to increased operating expenses.
The company’s adjusted EBITDA rose from $428.1 million a year earlier to $515.7 million in the first quarter of 2021.
Moreover, total revenues of $3.63 billion were 77.9% higher than the year-ago quarter and also outpaced the Zacks Consensus Estimate of $2.62 billion.
The Gathering and Processing segment recorded an operating margin of $275.1 million during the quarter, up 7.6% from $255.7 million achieved in the year-ago period. Moreover, Permian Basin volumes marginally increased year over year to 2,395.9 million cubic feet per day.
In the Logistics and Transportation (or the Downstream) segment, the company reported an operating margin of $348.7 million, up 18.6% year over year. Targa Resources saw a pipeline throughput rise from 261.7 thousand barrels per day to 342.5, reflecting a 31% increase year over year. Moreover, export volumes expanded 5% year over year while natural gas liquids sale rose 18% year over year.
Targa Resources, Inc. price, Consensus and EPS Surprise
Targa Resources, Inc. price-consensus-eps-surprise-chart | Targa Resources, Inc. Quote
DCF, Capex & Balance Sheet
First-quarter 2021 distributable cash flow (DCF) was $397.4 million, 32% higher than $301.9 million in the year-ago period. Targa Resources paid out a dividend of 10 cents per share.
As of Mar 31, 2020, the company had $248.5 million in cash and cash equivalents and $7.1 billion of long-term debt. Debt-to-capitalization was 54%.
For 2021, Targa Resources reiterates its growth capital spending guidance in the $350-$450 million range and full-year maintenance capex of nearly $130 million.
With the energy player’s excellent business performance and consistent cost-cutting efforts as well as a more bullish commodity pricing estimate for the remaining year, it lifts its 2021 adjusted EBITDA view to the $1.80-$1.90 billion band.
Zacks Rank & Key Picks
Targa Resources currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Whiting Petroleum Corp. WLL, Matador Resources Co. MTDR and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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