DCF Studio

    TRGP · NYQ · Energy

    Targa Resources Corp.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 357.89

    Market price

    USD 294.73

    Implied upside

    +21.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 14.7% of revenue against depreciation of 7.8%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 357.89+21.4%
    Exit multiple
    USD 581.92+97.4%
    Market price
    USD 294.73

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn7bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 19.0bnUSD 24.0bnUSD 29.5bnUSD 35.5bnUSD 41.6bnUSD 47.5bnUSD 52.9bnUSD 57.3bnUSD 60.4bnUSD 61.9bn+14.0%
    EBITUSD 2.9bnUSD 3.6bnUSD 4.5bnUSD 5.4bnUSD 6.3bnUSD 7.2bnUSD 8.0bnUSD 8.7bnUSD 9.2bnUSD 9.4bn+14.0%
    NOPATUSD 2.3bnUSD 2.9bnUSD 3.6bnUSD 4.3bnUSD 5.1bnUSD 5.8bnUSD 6.5bnUSD 7.0bnUSD 7.4bnUSD 7.6bn+14.0%
    Add depreciation & amortisationUSD 1.5bnUSD 1.9bnUSD 2.3bnUSD 2.8bnUSD 3.2bnUSD 3.7bnUSD 4.1bnUSD 4.5bnUSD 4.7bnUSD 4.8bn+14.0%
    Less capital expenditureUSD -2.8bnUSD -3.4bnUSD -3.9bnUSD -4.5bnUSD -5.0bnUSD -5.3bnUSD -5.6bnUSD -5.6bnUSD -5.5bnUSD -5.2bn+7.2%
    Capex, % of revenue14.7%14.0%13.3%12.6%11.9%11.2%10.5%9.8%9.1%8.4%-
    Less increase in working capitalUSD -18.7mUSD -45.8mUSD -51.1mUSD -54.9mUSD -56.3mUSD -54.7mUSD -49.7mUSD -40.9mUSD -28.8mUSD -14.0m-3.2%
    Free cashflow to firmUSD 988.1mUSD 1.4bnUSD 1.9bnUSD 2.6bnUSD 3.3bnUSD 4.1bnUSD 5.0bnUSD 5.8bnUSD 6.5bnUSD 7.2bn+24.6%
    Discount factor0.96410.89610.83290.77410.71950.66880.62160.57780.53700.4991-
    Present valueUSD 952.6mUSD 1.2bnUSD 1.6bnUSD 2.0bnUSD 2.4bnUSD 2.8bnUSD 3.1bnUSD 3.3bnUSD 3.5bnUSD 3.6bn-
    Present Value Of The ForecastUSD 24.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.828Reported 0.744, pulled toward 1.0 (Blume)
    Cost of equity8.40%Risk-free + beta x equity risk premium
    Cost of debt5.78%Risk-free + 89bp, the spread for a A- rating at 3.9x interest cover. Book interest / average debt was lower, at 5.4%.
    Market capitalisationUSD 63.2bn78.3% of capital
    Total debtUSD 17.5bn21.7% of capital, book value as a proxy
    Tax rate19.3%Effective, capped at statutory
    WACC7.59%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 357.89

    74% of EV

    Forecast FCFF, final year
    USD 7.2bn
    Capex at depreciation, working capital in reinvestment
    USD 8.5bn
    Less reinvestment at g/ROIC (18.8% of NOPAT)
    USD -1.6bn
    Capitalised
    USD 6.9bn
    ROIC (reported)
    13.3%
    Terminal value, undiscounted
    USD 139.7bn
    Terminal value, discounted
    USD 69.7bn
    Enterprise value
    USD 94.2bn
    Less net debt
    USD 17.4bn
    Equity value
    USD 76.8bn

    Exit at 16.6x EBITDA

    Value per shareUSD 581.92

    83% of EV

    Terminal value, undiscounted
    USD 236.1bn
    Terminal value, discounted
    USD 117.8bn
    Enterprise value
    USD 142.3bn
    Less net debt
    USD 17.4bn
    Equity value
    USD 124.9bn

    Spread between methods: 48%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.59%578.38624.47686.59774.00904.89
    6.59%431.87453.65481.53518.07567.48
    7.59%334.34344.79357.89374.50395.90
    8.59%265.01269.64275.50282.92292.35
    9.59%213.37214.83216.87219.63223.28

    Outlined: this model. Green text: above today's price of 294.73. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-6.6%13.8%11.9%
    EBIT margin19.6%15.2%12.9%
    Discount rate-7.6%8.3%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.