Shares of Targa Sources Corp. TRGP have gained 5.7% since its first-quarter 2021 earnings announcement on Might 6.
This uptrend was led by the corporate’s better-than-expected bottom-line efficiency and its raised adjusted EBITDA steering for 2021 owing to anexcellent enterprise efficiency and sustained cost-cutting efforts in addition to a extra optimistic commodity pricing outlook for the remainder of 2021.
Behind the Earnings Headlines
The corporate reported first-quarter 2021 adjusted web earnings per share of 53 cents, beating the Zacks Consensus Estimate of 15 cents. This outperformance was aided by robust volumes throughout the corporate’s Permian gathering and processing techniques and a sturdy operational efficiency throughout its Logistics and Transportation techniques. Nevertheless, the underside line decreased 22.1% yr over yr as a result of elevated working bills.
The corporate’s adjusted EBITDA rose from $428.1 million a yr earlier to $515.7 million within the first quarter of 2021.
Furthermore, complete revenues of $3.63 billion have been 77.9% increased than the year-ago quarter and likewise outpaced the Zacks Consensus Estimate of $2.62 billion.
Operational Efficiency
The Gathering and Processing phase recorded an working margin of $275.1 million through the quarter, up 7.6% from $255.7 million achieved within the year-ago interval. Furthermore, Permian Basin volumes marginally elevated yr over yr to 2,395.9 million cubic toes per day.
Within the Logistics and Transportation (or the Downstream) phase, the corporate reported an working margin of $348.7 million, up 18.6% yr over yr. Targa Sources noticed a pipeline throughput rise from 261.7 thousand barrels per day to 342.5, reflecting a 31% enhance yr over yr. Furthermore, export volumes expanded 5% yr over yr whereas pure fuel liquids sale rose 18% yr over yr.
Targa Sources, Inc. Worth, Consensus and EPS Shock
Targa Sources, Inc. price-consensus-eps-surprise-chart | Targa Sources, Inc. Quote
DCF, Capex & Stability Sheet
First-quarter 2021 distributable money stream (DCF) was $397.four million, 32% increased than $301.9 million within the year-ago interval. Targa Sources paid out a dividend of 10 cents per share.
As of Mar 31, 2020, the corporate had $248.5 million in money and money equivalents and $7.1 billion of long-term debt. Debt-to-capitalization was 54%.
Steerage
For 2021, Targa Sources reiterates its development capital spending steering within the $350-$450 million vary and full-year upkeep capex of almost $130 million.
With the vitality participant’s wonderful enterprise efficiency and constant cost-cutting efforts in addition to a extra bullish commodity pricing estimate for the remaining yr, it lifts its 2021 adjusted EBITDA view to the $1.80-$1.90 billion band.
Zacks Rank & Key Picks
Targa Sources at the moment carries a Zacks Rank #3 (Maintain). Some better-ranked gamers within the vitality house are Whiting Petroleum Corp. WLL, Matador Sources Co. MTDR and Continental Sources, Inc. CLR, every presently flaunting a Zacks Rank #1 (Sturdy Purchase). You possibly can see the whole checklist of at this time’s Zacks #1 Rank shares right here.
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