Perilous Reversal Stock: Targa Resources Partners (NGLS)

Trade-Ideas LLC identified Targa Resources Partners ( NGLS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Targa Resources Partners as such a stock due to the following factors:

  • NGLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.4 million.
  • NGLS has traded 130,675 shares today.
  • NGLS is down 3.2% today.
  • NGLS was up 5% yesterday.

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More details on NGLS:

Targa Resources Partners LP owns, operates, acquires, and develops midstream energy assets in the United States. The stock currently has a dividend yield of 32.9%. NGLS has a PE ratio of 13. Currently there are 7 analysts that rate Targa Resources Partners a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Targa Resources Partners has been 2.3 million shares per day over the past 30 days. Targa has a market cap of $1.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.44 and a short float of 2.3% with 0.94 days to cover. Shares are down 39.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Targa Resources Partners as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 87.39% to $215.50 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 -38.77%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 31.9%. Since the same quarter one year prior, revenues fell by 28.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 78.20%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 97.43% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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 outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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