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Targa Resources Corp. (TRGP)

Company Dividend Discount ModelIndustry: Oil & Gas MidstreamSector: Energy

Valuation Snapshot

Stable Growth$178.22 - $475.75$273.04
Multi-Stage$124.91 - $136.30$130.50
Blended Fair Value$201.77
Current Price$174.08
Upside15.91%
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 Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$178.22$273.04$475.75
Upside / Downside2.38%56.85%173.29%

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 Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)881.09889.44897.80
Year 2 PV (M)986.501,005.291,024.25
Year 3 PV (M)1,084.031,115.151,146.86
Year 4 PV (M)1,174.101,219.261,265.70
Year 5 PV (M)1,257.101,317.811,380.86
PV of Terminal Value (M)21,887.7622,944.9424,042.59
Equity Value (M)27,270.5828,491.9029,758.06
Shares Outstanding (M)218.33218.33218.33
Fair Value$124.91$130.50$136.30
Upside / Downside-28.25%-25.03%-21.70%

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