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Targa Resources Corp (NYSE:TRGP)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Targa Resources Corp has an F-score of 6 indicating the company's financial situation is typical for a stable company.

TRGP' s 10-Year Piotroski F-Score Range
Min: 5   Max: 6
Current: 6

5
6

During the past 6 years, the highest Piotroski F-Score of Targa Resources Corp was 6. The lowest was 5. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 20.5 + 16.3 + 15 + 13.4 = $65 Mil.
Cash Flow from Operations was 124.6 + 95.4 + -11.3 + 174 = $383 Mil.
Revenue was 2159.8 + 1556.8 + 1441.6 + 1397.8 = $6,556 Mil.
Gross Profit was 355.1 + 297 + 265.2 + 260.3 = $1,178 Mil.
Total Assets at the begining of this year (Dec12) was $5,105 Mil.
Total Assets was $6,049 Mil.
Long-Term Debt was $2,989 Mil.
Total Current Assets was $897 Mil.
Total Current Liabilities was $770 Mil.
Net Income was 11.2 + 8.7 + 8.6 + 9.6 = $38 Mil.

Revenue was 1527.3 + 1393.5 + 1319.1 + 1645.8 = $5,886 Mil.
Gross Profit was 260.1 + 240.5 + 244.5 + 261.6 = $1,007 Mil.
Total Assets at the begining of last year (Dec11) was $3,831 Mil.
Total Assets was $5,105 Mil.
Long-Term Debt was $2,475 Mil.
Total Current Assets was $733 Mil.
Total Current Liabilities was $687 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Targa Resources Corp's current net income was 65. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Targa Resources Corp's current cash flow from operations was 383. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Dec12)
=65.2/5105
=0.01277179

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=38.1/3831
=0.00994518

Targa Resources Corp's return on assets of this year was 0.01277179. Targa Resources Corp's return on assets of last year was 0.00994518. ==> This year is higher. ==> Score 1.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Targa Resources Corp's current net income was 65. Targa Resources Corp's current cash flow from operations was 383. ==> 383 > 65 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=2989.3/6048.6
=0.49421354

Gearing (Last Year)=Long-Term Debt/Total Assets
=2475.3/5105
=0.48487757

Targa Resources Corp's gearing of this year was 0.49421354. Targa Resources Corp's gearing of last year was 0.48487757. ==> Last year is lower ==> Score 0.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=897.2/770.4
=1.16458982

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=733.3/686.6
=1.06801631

Targa Resources Corp's current ratio of this year was 1.16458982. Targa Resources Corp's current ratio of last year was 1.06801631. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Targa Resources Corp's number of shares in issue this year was 42.1. Targa Resources Corp's number of shares in issue last year was 41.8. ==> There is more number of shares in issue this year. ==> Score 0.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=1177.6/6556
=0.17962172

Gross Margin (Last Year)=Gross Profit/Revenue
=1006.7/5885.7
=0.17104168

Targa Resources Corp's gross margin of this year was 0.17962172. Targa Resources Corp's gross margin of last year was 0.17104168. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Dec12)
=6556/5105
=1.28423115

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=5885.7/3831
=1.53633516

Targa Resources Corp's asset turnover of this year was 1.28423115. Targa Resources Corp's asset turnover of last year was 1.53633516. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+1+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Targa Resources Corp has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Targa Resources Corp Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13
Q1 11
Q2 11
Q3 11
Q4 11
Q5 00
Q6 01
Q7 00
Q8 11
Q9 00
F-score 56

Targa Resources Corp Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111
Q2 1111111
Q3 1111111
Q4 1111111
Q5 0000000
Q6 1000001
Q7 0000000
Q8 1111111
Q9 1000000
F-score 0007555556
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