Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Targa Resources Corp.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 26.7% to -22.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 31, DPO 43, DIO 9). At a 7.0% WACC with mid-year discounting, the terminal value (76% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 9.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $161.19 per share, suggesting TRGP is overvalued by 35.8% at the current price of $251.17.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,582 | 2,838 | 2,968 | 2,809 | 2,191 | 2,246 |
| (−) Net Interest | 794 | 872 | 912 | 864 | 674 | 691 |
| (+) D&A | 2,105 | 2,539 | 2,860 | 2,998 | 2,988 | 3,062 |
| EBITDA | 5,480 | 6,249 | 6,741 | 6,671 | 5,853 | 5,999 |
| (−) Tax | 367 | 404 | 422 | 400 | 312 | — |
| (−) CapEx | 2,676 | 2,941 | 3,076 | 2,911 | 2,271 | — |
| (−) ΔWC | 145 | 17 | 9 | -11 | -42 | — |
| Free Cash Flow (FCF) | 2,292 | 2,887 | 3,233 | 3,371 | 3,312 | — |
| Peers' EBITDA Multiple | 9.2x | |||||
| Terminal Value | 55,251 | |||||
| WACC / Discount Rate | 7.01% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,215 | 2,608 | 2,730 | 2,659 | 2,441 | 39,377 |
| Enterprise Value | 52,030 | |||||
| Projection Period | 12,653 | 24.3% | ||||
| Terminal Value | 39,377 | 75.7% | ||||
| (−) Current Net Debt | 17,380 | |||||
| Equity Value | 34,650 | |||||
| (÷) Outstanding Shares | 215M | |||||
| Fair Price | $161 | -35.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 5.2x | 7.2x | 9.2x | 11.2x | 13.2x |
|---|---|---|---|---|---|
| 5.0% | $95 | $139 | $182 | $226 | $270 |
| 6.0% | $88 | $130 | $171 | $213 | $255 |
| 7.0% | $82 | $121 | $161 | $201 | $241 |
| 8.0% | $76 | $114 | $151 | $189 | $227 |
| 9.0% | $70 | $106 | $142 | $179 | $215 |
Current price: $251.17. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.