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

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Targa Resources Corp has an F-score of 4 indicating the company's financial situation is typical for a stable company.

TRGP' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 4

4
8

During the past 8 years, the highest Piotroski F-Score of Targa Resources Corp was 8. The lowest was 4. 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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 3.2 + 15.2 + 12.7 + 26.9 = $58 Mil.
Cash Flow from Operations was 292.6 + 191.6 + 211.3 + 339.2 = $1,035 Mil.
Revenue was 1679.7 + 1699.4 + 1632.1 + 1647.4 = $6,659 Mil.
Gross Profit was 411.4 + 462.4 + 326.1 + 329.4 = $1,529 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(6453.4 + 13625.3 + 13352.9 + 13418.2 + 13253.7) / 5 = $12020.7 Mil.
Total Assets at the begining of this year (Dec14) was $6,453 Mil.
Long-Term Debt was $5,762 Mil.
Total Current Assets was $920 Mil.
Total Current Liabilities was $882 Mil.
Net Income was 19.6 + 26.4 + 30.7 + 25.5 = $102 Mil.

Revenue was 2294.7 + 2000.6 + 2288.3 + 2032.8 = $8,616 Mil.
Gross Profit was 379.6 + 384 + 295 + 288.7 = $1,347 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(6048.6 + 6055.2 + 6328.4 + 6491.9 + 6453.4) / 5 = $6275.5 Mil.
Total Assets at the begining of last year (Dec13) was $6,049 Mil.
Long-Term Debt was $2,885 Mil.
Total Current Assets was $883 Mil.
Total Current Liabilities was $827 Mil.

Profitability

Question 1. 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 (TTM) was 58. ==> Positive ==> Score 1.

Question 2. 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 (TTM) was 1,035. ==> Positive ==> Score 1.

Question 3. 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 (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=102.2/6048.6
=0.01689647

Targa Resources Corp's return on assets of this year was 0.00898751. Targa Resources Corp's return on assets of last year was 0.01689647. ==> Last year is higher ==> Score 0.

Question 4. 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 (TTM) was 58. Targa Resources Corp's current cash flow from operations (TTM) was 1,035. ==> 1,035 > 58 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

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

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=5761.5/12020.7
=0.47929821

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=2885.4/6275.5
=0.45978806

Targa Resources Corp's gearing of this year was 0.47929821. Targa Resources Corp's gearing of last year was 0.45978806. ==> Last year is lower than this year ==> Score 0.

Question 6. 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: Dec15)=Total Current Assets/Total Current Liabilities
=920/881.6
=1.04355717

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=882.5/826.5
=1.0677556

Targa Resources Corp's current ratio of this year was 1.04355717. Targa Resources Corp's current ratio of last year was 1.0677556. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

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

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

Targa Resources Corp's number of shares in issue this year was 53.6. Targa Resources Corp's number of shares in issue last year was 42.1. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. 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: TTM)=Gross Profit/Revenue
=1529.3/6658.6
=0.2296729

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1347.3/8616.4
=0.15636461

Targa Resources Corp's gross margin of this year was 0.2296729. Targa Resources Corp's gross margin of last year was 0.15636461. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year 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 (TTM)/Total Assets at the Beginning of This Year (Dec14)
=6658.6/6453.4
=1.03179719

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=8616.4/6048.6
=1.42452799

Targa Resources Corp's asset turnover of this year was 1.03179719. Targa Resources Corp's asset turnover of last year was 1.42452799. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+0+0+0+1+0
=4

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Targa Resources Corp has an F-score of 4 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

Dec11Dec12Dec13Dec14Dec15
Question 1 11111
Question 2 11111
Question 3 11110
Question 4 11111
Question 5 10110
Question 6 00100
Question 7 00010
Question 8 01011
Question 9 10010
F-score 65684

Targa Resources Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1111111000
Question 4 1111111111
Question 5 0111110000
Question 6 0111101000
Question 7 0001110000
Question 8 1000011111
Question 9 0000110000
F-score 5667886444
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