Financial Survey: Targa Resources (NYSE:TRGP) and Torm (NASDAQ:TRMD)

Targa Resources (NYSE:TRGP) and Torm (NASDAQ:TRMD) are both energy companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Volatility & Risk

Targa Resources has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, Torm has a beta of 0.07, suggesting that its share price is 93% less volatile than the S&P 500.

Valuation and Earnings

This table compares Targa Resources and Torm”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Targa Resources	$17.03 billion	3.55	$1.84 billion	$10.46	26.93
Torm	$1.76 billion	2.32	$285.30 million	$6.07	6.59

Targa Resources has higher revenue and earnings than Torm. Torm is trading at a lower price-to-earnings ratio than Targa Resources, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

92.1% of Targa Resources shares are held by institutional investors. Comparatively, 73.9% of Torm shares are held by institutional investors. 1.4% of Targa Resources shares are held by company insiders. Comparatively, 0.4% of Torm shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Targa Resources and Torm, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Targa Resources	0	0	18	1	3.05
Torm	0	2	1	1	2.75

Targa Resources presently has a consensus price target of $317.24, indicating a potential upside of 12.62%. Torm has a consensus price target of $38.00, indicating a potential downside of 5.00%. Given Targa Resources’ stronger consensus rating and higher possible upside, equities analysts clearly believe Targa Resources is more favorable than Torm.

Dividends

Targa Resources pays an annual dividend of $5.00 per share and has a dividend yield of 1.8%. Torm pays an annual dividend of $7.00 per share and has a dividend yield of 17.5%. Targa Resources pays out 47.8% of its earnings in the form of a dividend. Torm pays out 115.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources has increased its dividend for 5 consecutive years.

Profitability

This table compares Targa Resources and Torm’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Targa Resources	13.55%	69.26%	8.64%
Torm	35.51%	27.24%	17.96%

Summary

Targa Resources beats Torm on 14 of the 17 factors compared between the two stocks.

About Targa Resources

Targa Resources Corp., together with its subsidiary, Targa Resources Partners LP, owns, operates, acquires, and develops a portfolio of complementary domestic midstream infrastructure assets in North America. It operates in two segments, Gathering and Processing, and Logistics and Transportation. The company is involved in gathering, compressing, treating, processing, transporting, and selling natural gas; storing, fractionating, treating, transporting, and selling natural gas liquids (NGL) and NGL products, including services to liquefied petroleum gas exporters; and gathering, storing, terminaling, purchasing, and selling crude oil. It is also involved in the purchase and resale of NGL products; and sale of propane, as well as provision of related logistics services to multi-state retailers, independent retailers, and other end-users. In addition, the company offers NGL balancing services; and transportation services to refineries and petrochemical companies in the Gulf Coast area, as well as purchases, markets, and resells natural gas. As of December 31, 2023, it leased and managed approximately 605 railcars; 137 tractors; and 6 vacuum trucks and 2 pressurized NGL barges. Targa Resources Corp. was incorporated in 2005 and is headquartered in Houston, Texas.

About Torm

TORM plc, a shipping company, owns and operates a fleet of product tankers in the United Kingdom. It operates in two operating segments, Tanker and Marine Exhaust. The Tanker segment transports refined oil products, such as gasoline, jet fuel, kerosene, naphtha, and gas oil, as well as dirty petroleum products, including fuel oil. The Marine Exhaust segment engages in developing and producing advanced and green marine equipment. TORM plc was founded in 1889 and is based in London, the United Kingdom.