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Buy Target: Targa Resources (NYSE:TRGP)
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We look at Targa Resources Corp. (NYSE:TRGP) a company in the Oil & Gas Pipelines industry getting a lot of share market attention at present, to assess if it provides value for investors considering buying or selling it. Currently Targa Resources Corp. is trading at $99.06 after moving up 5.46% in the previous day of trading.
TRGP is trading with a trailing 12 month P/E multiple of 42.88 and an estimated forward P/E multiple of 41.96. The stock has an estimated 5 year annual growth of 47.70% and a PEG multiple of 0.90.
Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if Targa Resources Corp. is potentially a value buy for investors, the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the company rather than merely the growth for one earnings period ahead as forward P/E does.
That is to say, P/E simply doesn’t account for the long term prospects of TRGP. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of TRGP being 0.90, we consider Targa Resources Corp. to likely be underpriced.
This analysis means that value buyers who do not currently hold Targa Resources Corp. (NYSE:TRGP) should consider buying and investors currently holding the stock should continue holding.
The mean analyst 12 month target price for Targa Resources Corp. (NYSE:TRGP) is currently $118.13 or 19.25% above the current price. Additionally, the stock has been as high as $160.97 and as low as $82.09 in the last 52 weeks. Analysts are estimating that TRGP will report earnings per share of $0.54 next quarter.
