Why Targa Resources (TRGP) Stock Was Higher Today

NEW YORK (TheStreet) -- Shares of Targa Resources Corp. (TRGP) rose 20.45% to $150.62 before the close on Thursday after Energy Transfer Equity (ETE) was said to be working on a deal to acquire the company and its operating unit, Bloomberg reports.

An agreement between the two companies could be announced as soon as next week.

The combined value of Targa and its unit Targa Resources Partners LP (NGLS) is said to be over $15 billion, and the deal's value could go as high at $17 million, according to Bloomberg.

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Shares of Targa Resources are lower by -1.41% to $148.50 in after-hours trading today.

Shares of Targa Resources Partners are down -3.25% to $78.90, and Energy Transfer Equity stock is higher 5.17% to $56.50 in after-hours trading on Thursday. 

Separately, TheStreet Ratings team rates TARGA RESOURCES CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TARGA RESOURCES CORP (TRGP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TRGP's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 68.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TARGA RESOURCES CORP has improved earnings per share by 46.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TARGA RESOURCES CORP increased its bottom line by earning $1.55 versus $0.92 in the prior year. This year, the market expects an improvement in earnings ($2.64 versus $1.55).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 46.3% when compared to the same quarter one year prior, rising from $13.40 million to $19.60 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TARGA RESOURCES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 83.16% to $318.70 million when compared to the same quarter last year. In addition, TARGA RESOURCES CORP has also vastly surpassed the industry average cash flow growth rate of 17.38%.
  • You can view the full analysis from the report here: TRGP Ratings Report
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