Targa Resources Corp. (TRGP) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Targa Resources Corp.

Updated on October 26, 2026 · accounts published on August 6, 2026

Reading of October 23, 2026: A highly profitable energy business with record margins and a heavy debt load

Targa Resources trades at a P/E of 28.8 over the last 12 months, 48 % above its sector median of 19.4, after a 96 % rise in one year.

• Is Targa Resources expensive or cheap? Its P/E of 28.8 over the last 12 months is 48 % above the sector median of 19.4, after a 96 % rise in a year.
• How is the business doing? Operating margin reached 23 % over the last 12 months, against a 2014-2025 average of 9.7 %.
• How strong is the balance sheet? Net debt was $84.80 per share in fiscal 2025, 3.6× EBITDA and 28 % of the current share price.
• What to expect from the next earnings? Targa Resources reports on November 5, 2026; analysts expect EPS of $2.74, below the $3.54 of the last quarter.
• Does it generate cash through the cycle and cover the dividend? Free cash flow covered the fiscal 2025 dividend only 0.7×, below the 1.2× this sector treats as healthy.

Is Targa Resources expensive or cheap?

Targa Resources trades at a P/E of 28.8 over the last 12 months, 48 % above the 19.4 median of 191 energy companies and above its own four-year average of 23.7, though still inside the neutral band for a cyclical stock. EV/EBITDA is less forgiving: 17.7× against a nine-year average of 13.1×, past the 110 % line where this sector counts it as expensive. The free cash flow yield is only 1.0 % and the earnings yield 3.2 %. After a 96 % gain in 12 months, the stock sits within 1 % of its 52-week high of $302.37, so the market is already paying for strong years ahead.

How is the business doing?

Profitability is at a record. The operating margin was 23 % over the last 12 months and 20 % in fiscal 2025, the highest of the 12 fiscal years since 2014, whose average was 9.7 %. Revenue grew only 3.1 % year on year, yet EPS jumped 48 %, so the gains come from margins rather than volume. ROIC stands at 14.1 % over the last 12 months, 6.8 points above the sector median of 7.3 %, and averaged 12 % over 2021-2025. The longer record is uneven: ROIC topped 10 % in only 4 of the last 10 fiscal years and was negative in 2019.

How strong is the balance sheet?

Leverage is the weak point. Net debt equals 3.6× EBITDA in fiscal 2025, well above the 2.0× this sector considers healthy, and debt to equity is 5.51 over the last 12 months, which also helps explain an ROE of 72 %. A current ratio of 0.77 means short-term liabilities exceed short-term assets, and the Altman Z of 2.3 sits in the grey zone. Piotroski scores 6 of 9, a middling result. The dividend yields 1.5 % and has risen for 4 consecutive fiscal years, with a payout of 44 % of earnings in fiscal 2025.

What to expect from the next earnings?

Of the 34 analysts covering Targa Resources, 27 rate it a buy, 6 a hold and none a sell. The 2026 EPS consensus rose 0.5 % in the last 30 days, from $11.27 to $11.33 across 10 analysts, and the revenue estimate moved up by the same amount: small but positive revisions. The company beat EPS estimates in 5 of the last 8 quarters, and on August 6, 2026 it reported $3.54 against $2.83 expected, a 25 % surprise. The $2.74 expected for the quarter due November 5, 2026 sets a lower bar than the last result.

Does it generate cash through the cycle and cover the dividend?

In energy, profits follow commodity prices, so what counts is the cash generated across the whole cycle and whether the dividend survives a bad year. On those tests Targa Resources mostly falls short. Free cash flow was positive in 7 of the last 10 fiscal years (2016-2025), one short of the 8 that signals cycle discipline, and the free cash flow yield of 1.0 % over the last 12 months is far from the healthy 8 %. Capex took 19.5 % of revenue in fiscal 2025, inside the 10-20 % range, yet it still leaves less free cash than the dividend requires.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.