Contrasting Gevo (NASDAQ:GEVO) & Targa Resources (NYSE:TRGP)

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

Analyst Recommendations

This is a breakdown of recent recommendations for Targa Resources and Gevo, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Targa Resources	0	1	17	1	3.00
Gevo	1	3	2	0	2.17

Targa Resources currently has a consensus price target of $309.94, suggesting a potential upside of 6.79%. Gevo has a consensus price target of $2.55, suggesting a potential upside of 62.42%. Given Gevo’s higher possible upside, analysts clearly believe Gevo is more favorable than Targa Resources.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Targa Resources	$16.74 billion	3.72	$1.84 billion	$10.46	27.75
Gevo	$177.51 million	2.19	-$33.84 million	($0.89)	-1.76

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

Volatility and Risk

Targa Resources has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, Gevo has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Institutional & Insider Ownership

92.1% of Targa Resources shares are owned by institutional investors. Comparatively, 35.2% of Gevo shares are owned by institutional investors. 1.4% of Targa Resources shares are owned by insiders. Comparatively, 7.1% of Gevo shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Targa Resources and Gevo’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%
Gevo	-119.93%	-6.50%	-4.22%

Summary

Targa Resources beats Gevo on 12 of the 15 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 Gevo

Gevo, Inc. operates as a carbon abatement company. It operates through three segments: Gevo, Agri-Energy, and Renewable Natural Gas. The company focuses on transforming renewable energy into energy-dense liquid hydrocarbons that can be used as renewable fuels. It offers renewable gasoline and diesel, isobutanol, sustainable aviation fuel, renewable natural gas, isobutylene, ethanol, and animal feed and protein. The company was formerly known as Methanotech, Inc. and changed its name to Gevo, Inc. in March 2006. Gevo, Inc. was incorporated in 2005 and is headquartered in Englewood, Colorado.