Eli Lilly and Company (LLY) vs Targa Resources Corp. (TRGP): Which Is the Better Buy in 2026?
As of 2026-06-19, LLY is fairly valued at $1099, with a DCF intrinsic value of $1143 and a margin of safety of 4%. TRGP is overvalued at $259, with an intrinsic value of $50 and a margin of safety of -422%. Of the two, LLY has the wider margin of safety.
Rewards
- ★Eli Lilly and Company has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 82.8% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Eli Lilly and Company scores 73/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Targa Resources Corp. has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
- ★Each dollar of retained earnings has created $2.97 of earning power — management is an exceptional capital allocator.
Risks
- ⚠FCF yield of 0.9% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Insiders have sold $18.6M worth of stock in the past 3 months — significant insider liquidation.
- ⚠High leverage (5.82x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠Insiders have sold $2.7M worth of stock in the past 3 months — significant insider liquidation.
- ⚠Free cash flow has declined at a 17.7% CAGR over the past 4 years — a concerning trend.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $1099?
The market implies +20.0% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +31.4%, reflecting heavy growth investment expected to generate future returns.
Requires positive FCF to compute implied growth rate.
Economic Moat Score
Learn more →Wide moat driven primarily by roic consistency. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Narrow moat with roic consistency as the key competitive advantage. Improving reinvestment efficiency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is optimistic — be cautious and ensure you have a margin of safety"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: LLY vs TRGP
Is Eli Lilly and Company or Targa Resources Corp. more undervalued in 2026?▼
Based on our discounted cash flow model, LLY trades at a 3.9% margin of safety (intrinsic value $1143 vs. price $1099), compared to TRGP's -421.7% margin of safety (intrinsic $50 vs. $259).
Which stock has a wider economic moat, Eli Lilly and Company or Targa Resources Corp.?▼
LLY scores 73/100 (Wide moat), while TRGP scores 54/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Targa Resources Corp. in financial distress?▼
TRGP's Altman Z-Score of 2.3 places it in the Grey zone, signaling elevated bankruptcy risk. LLY scores 8.7 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Eli Lilly and Company or Targa Resources Corp.?▼
Eli Lilly and Company (LLY) generates a 0.9% free cash flow yield, compared to Targa Resources Corp.'s -0.6%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Eli Lilly and Company or Targa Resources Corp.?▼
LLY earns 37.8% ROIC versus TRGP's 12.2%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Eli Lilly and Company's or Targa Resources Corp.'s?▼
TRGP's dividend earns a safety score of 64/100 (Safe), compared to LLY's 64/100 (Safe). TRGP has raised its dividend for 3 consecutive years.