Targa Resources (TRGP) is back in focus after first quarter 2026 results showed revenue of US$4,094.7 million and net income of US$479.6 million, alongside commentary highlighting Permian growth potential and extensive midstream infrastructure.

The first quarter earnings, together with ongoing share repurchases of US$696.92 million since August 2024, come against a strong backdrop, with a 30 day share price return of 9.47% and a one year total shareholder return of 59.75%. This has reinforced momentum that has built over the past five years.

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With the stock up 41.0% year to date and trading only about 3.5% below the average analyst price target, yet still screening at an estimated 42% intrinsic discount, is there real upside left here or is the market already baking in future growth?

Most Popular Narrative: 1.3% Undervalued

With Targa Resources last closing at $263.29 against a narrative fair value of $266.80, the widely followed view points to only a slight discount, yet the supporting story behind that fair value leans heavily on growth capex, higher forecast EBITDA and future earnings power.

Substantial investment in integrated export infrastructure, including the expansion and debottlenecking of LPG export facilities and new fractionation trains, directly leverages rising international and petrochemical-sector demand for U.S. NGLs, creating long-term opportunities to enhance utilization and operating leverage, which should support higher earnings and margins.

Curious how that build out in Permian plants, fractionators and export docks turns into a fair value close to the current price? The narrative leans on specific revenue growth, margin compression and earnings multiple assumptions that are anything but generic. The key question is how those moving parts combine to justify paying around the current P/E today for earnings that are still several years out. If that tension between heavy capex and projected earnings power interests you, the full narrative lays out the numbers behind this $266.80 figure.

Result: Fair Value of $266.80 (ABOUT RIGHT)

However, those projections depend heavily on continued Permian build out and export demand, while rising competition and potential midstream overbuild could pressure fees and future returns.

Another View: What The P/E Ratio Says

The SWS DCF model points to strong upside, yet the current P/E of 26.7x sits above both the estimated fair ratio of 25.9x and the US Oil and Gas industry average of 14.4x. That premium hints at valuation risk if growth or execution fall short, so which signal should investors focus on more?

Next Steps

With sentiment pulled between optimism on future earnings and concern about execution and valuation, it makes sense to review the available data and form a view promptly using 3 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.