Why Targa Resources (NGLS) Stock Is Tanking On Friday

NEW YORK (TheStreet) -- Shares of Targa Resources Partners LP (NGLS) are down -11.01% to $72.57 in mid-afternoon trading following the company's announcement that it's no longer in merger talks with Energy Transfer Equity (ETE).

Energy Transfer Equity wanted to work out a deal that would value Targa Resources Corp. (TRGP), a natural gas products exporting company, and its operating unit Targa Resources partners at over $15 billion, Bloomberg reports.

"There are no assurances whether or not discussions could resume or whether any agreement could be entered into in the future," Targa said.

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TheStreet Ratings team rates TARGA RESOURCES PARTNERS LP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TARGA RESOURCES PARTNERS LP (NGLS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and solid stock price performance. 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:

  • NGLS'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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 214.7% when compared to the same quarter one year prior, rising from $38.90 million to $122.40 million.
  • Net operating cash flow has significantly increased by 84.27% to $316.40 million when compared to the same quarter last year. In addition, TARGA RESOURCES PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of 17.38%.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TARGA RESOURCES PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Powered by its strong earnings growth of 387.50% and other important driving factors, this stock has surged by 45.25% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: NGLS Ratings Report
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