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Targa Resources: Will 4Q16 Results Boost Its Stock?

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Targa Resources: Will 4Q16 Results Boost Its Stock? PART 1 OF 6

Targa Resources Is Expected to Report Higher 4Q16 Earnings

Higher EBITDA

Targa Resources (TRGP) is scheduled to report its 4Q16 earnings on February 15, 2017. Analysts expect its EBITDA (earnings before interest, tax, depreciation, and amortization) for 4Q16 to be $294 million—an increase of 25% compared to $235.6 billion reported in 3Q16.

Targa Resources Is Expected to Report Higher 4Q16 Earnings

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The above graph compares Targa Resources’ adjusted EBITDA with estimates for the last ten quarters. The adjusted EBITDA for 4Q15 in the above chart doesn’t consider the goodwill impairment charge related to the acquisition of Targa Resources Partners.

EBITDA drivers

In the press release for Targa Resources 3Q16 results, Joe Bob Perkins, Targa Resources’ CEO, said, “We continue to see strong results for our businesses in the Permian and are encouraged with operational performance across the company. The third quarter drop in LPG export volumes has been more than offset by recent export activity, and we now expect to exceed our full year guidance for average export volumes.”

He also said, “With this performance, coupled with the receipt of the first annual payment related to the crude and condensate splitter, adjusted EBITDA for the fourth quarter will likely be the highest of the year.”

Perkins said, “We expect fourth quarter dividend coverage approaching 1.2 times and full year coverage consistent with our guidance of slightly above 1.0 times. Looking forward, our Field Gathering and Processing volumes should grow with improving prices, and our Downstream businesses will benefit from similar trends.”

Plains All American Pipeline (PAA) missed its 4Q16 earnings estimates. Read more in Plains All American Pipeline Misses 4Q16 Earnings Estimates.

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