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Targa (TRGP) Earnings Miss, Revenues Beat Estimates in Q4
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Targa Resources (TRGP - Free Report) reported fourth-quarter 2021 adjusted net income of 51 cents per share, lower than the Zacks Consensus Estimate of 65 cents. The miss can be attributed to operating margins in both of Targa’s segments being lower than the Zacks Consensus Estimate. Precisely, operating margins in the ‘Gathering and Processing’ and ‘Logistics and Transportation’ segments came in at $387.1 million and $343.5 million, missing the respective Zacks Consensus Estimate of $502 million and $383 million.
However, the bottom line turned around from the year-ago quarter’s loss of 4 cents per share on higher sales.
Adjusted EBITDA rose from $438.1 million a year earlier to $570.6 million in the fourth quarter of 2021.
Total revenues of $5.4 billion were 111.5% higher than the year-ago quarter’s level and also outpaced the Zacks Consensus Estimate of $4.88 billion.
Before the earnings release, TRGP announced a quarterly dividend of 35 cents per share (or $1.40 per share annualized) for the fourth quarter of 2021. The dividend was paid out on Feb 15, 2022 to its shareholders of record as of Jan 31, 2022.
Operational Performance
The Gathering and Processing segment recorded an operating margin of $387.1 million during the quarter, up 46.7% from $263.9 million achieved in the year-ago period. Moreover, Permian Basin volumes expanded year over year to 3,015.9 million cubic feet per day.
In the Logistics and Transportation (or the Downstream) segment, the company reported an operating margin of $343.5 million, up 6.7% year over year. Targa saw NGL pipeline transportation volumes rise from 355.4 thousand barrels per day (mbpd) to 432.8 mbpd, surging 21.8% year over year. However, export volumes fell 5.2% year over year, while natural gas liquids sales rose about 13% year over year.
Targa Resources, Inc. Price, Consensus and EPS Surprise
Fourth-quarter 2021 distributable cash flow was $420.7 million, 43.1% more than $293.9 million in the year-ago period.
As of Dec 31, 2021, TRGP had $158.5 million of cash and cash equivalents and $6.43 billion of long-term debt. Debt-to-capitalization was 52.7%.
Guidance
Targa estimates 2022 average Permian natural gas inlet volumes to rise 12% to 15% more than its 2021 average volumes, which is projected to drive incremental volumes through its L&T systems.
For 2022, Targa projects its growth-driving capital spending guidance of around $700 million to $800 million. TRGP reiterated full-year maintenance Capex at around $150 million.
Targa anticipates 2022 adjusted EBITDA between $2.3 billion and $2.5 billion, with the midpoint representing 17% growth more than full-year 2021 adjusted EBITDA.
ConocoPhillips is valued at around $116 billion. The consensus estimate for ConocoPhillips’ 2022 earnings has been revised 16.5% upward over the past 60 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 80.3% in a year.
Marathon Oil has a projected earnings growth rate of 83.44% for this year. The Zacks Consensus Estimate for Marathon Oil’s 2022 earnings has been revised 26.8% upward over the past 60 days.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have surged around 101.5% in a year.
Cenovus Energy is valued at more than $30 billion. The Zacks Consensus Estimate for Cenovus Energy’s 2022 earnings has been revised 13.6% upward over the past 60 days.
Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in the fourth quarter. CVE shares have surged around 111.3% in a year.
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Targa (TRGP) Earnings Miss, Revenues Beat Estimates in Q4
Targa Resources (TRGP - Free Report) reported fourth-quarter 2021 adjusted net income of 51 cents per share, lower than the Zacks Consensus Estimate of 65 cents. The miss can be attributed to operating margins in both of Targa’s segments being lower than the Zacks Consensus Estimate. Precisely, operating margins in the ‘Gathering and Processing’ and ‘Logistics and Transportation’ segments came in at $387.1 million and $343.5 million, missing the respective Zacks Consensus Estimate of $502 million and $383 million.
However, the bottom line turned around from the year-ago quarter’s loss of 4 cents per share on higher sales.
Adjusted EBITDA rose from $438.1 million a year earlier to $570.6 million in the fourth quarter of 2021.
Total revenues of $5.4 billion were 111.5% higher than the year-ago quarter’s level and also outpaced the Zacks Consensus Estimate of $4.88 billion.
Before the earnings release, TRGP announced a quarterly dividend of 35 cents per share (or $1.40 per share annualized) for the fourth quarter of 2021. The dividend was paid out on Feb 15, 2022 to its shareholders of record as of Jan 31, 2022.
Operational Performance
The Gathering and Processing segment recorded an operating margin of $387.1 million during the quarter, up 46.7% from $263.9 million achieved in the year-ago period. Moreover, Permian Basin volumes expanded year over year to 3,015.9 million cubic feet per day.
In the Logistics and Transportation (or the Downstream) segment, the company reported an operating margin of $343.5 million, up 6.7% year over year. Targa saw NGL pipeline transportation volumes rise from 355.4 thousand barrels per day (mbpd) to 432.8 mbpd, surging 21.8% year over year. However, export volumes fell 5.2% year over year, while natural gas liquids sales rose about 13% 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
Fourth-quarter 2021 distributable cash flow was $420.7 million, 43.1% more than $293.9 million in the year-ago period.
As of Dec 31, 2021, TRGP had $158.5 million of cash and cash equivalents and $6.43 billion of long-term debt. Debt-to-capitalization was 52.7%.
Guidance
Targa estimates 2022 average Permian natural gas inlet volumes to rise 12% to 15% more than its 2021 average volumes, which is projected to drive incremental volumes through its L&T systems.
For 2022, Targa projects its growth-driving capital spending guidance of around $700 million to $800 million. TRGP reiterated full-year maintenance Capex at around $150 million.
Targa anticipates 2022 adjusted EBITDA between $2.3 billion and $2.5 billion, with the midpoint representing 17% growth more than full-year 2021 adjusted EBITDA.
Zacks Rank & Key Picks
Targa currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy space are ConocoPhillips (COP - Free Report) , Marathon Oil (MRO - Free Report) and Cenovus Energy (CVE - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips is valued at around $116 billion. The consensus estimate for ConocoPhillips’ 2022 earnings has been revised 16.5% upward over the past 60 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 80.3% in a year.
Marathon Oil has a projected earnings growth rate of 83.44% for this year. The Zacks Consensus Estimate for Marathon Oil’s 2022 earnings has been revised 26.8% upward over the past 60 days.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have surged around 101.5% in a year.
Cenovus Energy is valued at more than $30 billion. The Zacks Consensus Estimate for Cenovus Energy’s 2022 earnings has been revised 13.6% upward over the past 60 days.
Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in the fourth quarter. CVE shares have surged around 111.3% in a year.