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Targa Resources Corp. (TRGP)

Company Dividend Discount ModelIndustry: Oil & Gas MidstreamSector: Energy

Valuation Snapshot

Stable Growth$177.32 - $470.39$271.15
Multi-Stage$124.52 - $135.87$130.09
Blended Fair Value$200.62
Current Price$174.08
Upside15.25%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-8.60%18.47%2.821.961.740.861.814.424.163.862.590.82
YoY Growth--44.04%12.54%102.51%-52.64%-58.97%6.22%7.72%49.00%216.15%58.41%
Dividend Yield--1.41%1.74%2.38%1.14%5.71%63.95%9.82%8.78%4.33%2.75%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,650.40
(-) Cash Dividends Paid (M)767.40
(=) Cash Retained (M)883.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)330.08206.30123.78
Cash Retained (M)883.00883.00883.00
(-) Cash Required (M)-330.08-206.30-123.78
(=) Excess Retained (M)552.92676.70759.22
(/) Shares Outstanding (M)218.33218.33218.33
(=) Excess Retained per Share2.533.103.48
LTM Dividend per Share3.513.513.51
(+) Excess Retained per Share2.533.103.48
(=) Adjusted Dividend6.056.616.99
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$177.32$271.15$470.39
Upside / Downside1.86%55.76%170.22%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,650.401,757.681,871.921,993.602,123.182,261.192,329.03
Payout Ratio46.50%55.20%63.90%72.60%81.30%90.00%92.50%
Projected Dividends (M)767.40970.211,196.141,447.341,726.142,035.072,154.35

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)880.95889.30897.65
Year 2 PV (M)986.171,004.961,023.92
Year 3 PV (M)1,083.501,114.601,146.29
Year 4 PV (M)1,173.331,218.451,264.86
Year 5 PV (M)1,256.061,316.731,379.72
PV of Terminal Value (M)21,805.1522,858.3523,951.85
Equity Value (M)27,185.1628,402.3829,664.29
Shares Outstanding (M)218.33218.33218.33
Fair Value$124.52$130.09$135.87
Upside / Downside-28.47%-25.27%-21.95%

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