Targa Resources Corp. TRGP is set to report fourth-quarter earnings on Feb. 20. The Zacks Consensus Estimate for earnings is pegged at $1.88 per share and the same for revenues is pinned at $4.08 billion.

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Let us delve into the factors that might have influenced TRGP’s performance in the to-be-reported quarter. Before that, it is worth taking a look at the company’s performance in the last reported quarter.

Highlights of TRGP’s Q3 Earnings & Surprise History

In the last reported quarter, the Houston, TX-based oil and gas storage and transportation company reported earnings of $1.75 per share, which beat the Zacks Consensus Estimate of $1.58. This was primarily due to strong Permian Basin volumes, robust NGL sales and lower product costs in the reported quarter. The company’s revenues totaled $3.9 billion, down 1.1% year over year.

TRGP’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the remaining two, delivering an average negative surprise of 1.60%. This is depicted in the graph below:

Targa Resources, Inc. Price and EPS Surprise

Targa Resources, Inc. price-eps-surprise | Targa Resources, Inc. Quote

Trend in TRGP’s Estimate Revision

The Zacks Consensus Estimate for fourth-quarter 2024 earnings has not witnessed any movement in the past seven days.  The estimated figure indicates a 52.85% year-over-year bottom-line increase. However, the Zacks Consensus Estimate for revenues indicates a decrease of 3.84% from the year-ago period’s level.

Factors to Consider Ahead of TRGP’s Q4 Release

TRGP makes money by collecting, processing and transporting natural gas, oil and related products like propane. The company moves these products through pipelines, railcars and trucks, stores them, and sells them to other businesses. Targa also provides services to companies like refineries and exports natural gas liquids. In simple terms, TRGP earns by handling and selling energy products and offering services to other companies in the energy industry.

TRGP is expected to have benefited from strong Permian Basin activity in the fourth quarter, driving higher gathering and processing volumes.  Our predictions indicate that the fourth-quarter gross NGL production for the Gathering and Processing segment is likely to have increased to 841 MMcf/d, up from 759 MMcf/d recorded in the year-ago period. The company’s increasing focus on fee-based revenues in its Logistics and Transportation segment is likely to have provided earnings stability amid commodity price fluctuations.

Our predictions indicate that the fourth-quarter operating margin for the Gathering and Processing segment is likely to have increased to $620 million, up from $552 million recorded in the year-ago period. Similarly, we expect the fourth-quarter operating margin for the Logistics and Transportation segment to have increased to $624 million, up from $501 million in the year-ago period.

On a bearish note, our predictions indicate a decline in the Gathering and Processing segment's average realized prices for natural gas to $1.78, a drop from $2.16 in the year-ago period. TRP's Gathering and Processing Central in North Texas is anticipated to have experienced a significant decrease in gross NGL production, falling to 21.12 MMcf/d from 24.50 MMcf/d reported in the year-ago period. Likewise, TRP's Gathering and Processing Central in Southok is expected to have seen a decrease in gross NGL production, dropping to 31.15 MMcf/d, down from 40 MMcf/d in the year-ago period.

Similarly, TRP's Gathering and Processing Central in Southtx is forecasted to have experienced a decline in gross NGL production, reducing to 31.15 MMcf/d down from 40 MMcf/d in the year-ago period. Lastly, TRP's Gathering and Processing Central in Coastal is also expected to have seen a decline in gross NGL production, dropping to 31.45 MMcf/d, down from 43.20 MMcf/d during the year-ago period. On a more cautious note, inflationary pressures are likely to have increased operational expenses, with rising input costs and labor expenses potentially affecting overall profitability.

TRGP is likely to have benefited from strong Permian Basin activity, driving higher gathering and processing volumes and improved operating margins in both its Gathering and Processing, and Logistics and Transportation segments. However, declines in natural gas prices and reduced NGL production across several regions could pose challenges

What Does Our Model Predict for TRGP?

The proven Zacks model does not conclusively show an earnings beat for TRGP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

Earnings ESP of TRGP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -3.02%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

TRGP’s Zacks Rank: TRGP currently carries a Zacks Rank #3.

Stocks to Consider

Here are some firms from the energy space that you may want to consider, as these have the right combination of elements to post an earnings beat this reporting cycle.

CNX Resources CNX has an Earnings ESP of +8.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Valued at around $4.49 billion, CLMT’s shares have gained 49.6% in a year. Notably, the Zacks Consensus Estimate for CNX’s 2025 earnings per share indicates 26.64% year-over-year growth.

Calumet, Inc. CLMT has an Earnings ESP of +7.11% and a Zacks Rank #2. Valued at around $1.42 billion, CLMT’s shares have lost 5.9 % in a year.

The firm is scheduled to release earnings on Feb. 28. Calumet manufactures, formulates and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets.

Berry BRY has an Earnings ESP of +8.33% and a Zacks Rank #3. The firm is scheduled to release earnings on March 12.

Berry is an independent upstream energy company which focuses on the conventional, long-lived oil reserves principally in the San Joaquin basin of California. Valued at around $334.68 million, BRY’s shares have lost 5.9% in a year.

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