Summary
Targa's share price is forming a large reversal pattern.
Its operations are recovering from a collapse in energy prices in recent years.
I am adding a position in this beaten down name.
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Targa Resources Corp. (TRGP) is seeing its share price reverse higher after years of decline due to strengthening fundamental operations. Rising energy commodity prices are leading to stronger volume growth, benefiting Targa’s top line results. Moreover, the company continues to invest in new areas of growth, while seeing its newly started projects off to an early success. The company continues to issue debt, but maintains a strong balance sheet due to operational expansion. Its share price looks to be gaining upside momentum, leading me to take a position in the name.
Results Overview
Targa's Q2 results were impressive, with adjusted EBITDA coming in at $326 million, 26% higher than the same period in 2017, driven by strong gathering and processing volume growth, higher commodity prices, and higher downstream fractionation. Its gathering and processing segment saw its sequential operating margin increase $21 million, driven by higher natural gas inlet volume in the Permian, Badlands, North Texas, and higher crude oil gathered volumes in the Badlands and Permian. Permian crude volumes also gathered in Q2 were up 35%.
