As of June 13, 2025, Target Hospitality Corp has a Discounted Cash Flow (DCF) derived fair value of $11.18 per share. With the current market price at $6.97, this represents a potential upside of 60.4%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $10.38 |
| DCF Fair Value (10-year) | $11.18 |
| Potential Upside (5-year) | 48.9% |
| Potential Upside (10-year) | 60.4% |
| Discount Rate (WACC) | 6.6% - 8.9% |
Revenue is projected to grow from $386 million in 12-2024 to $390 million by 12-2034, representing a compound annual growth rate of approximately 0.1%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 386 | 31% |
| 12-2025 | 281 | -27% |
| 12-2026 | 304 | 8% |
| 12-2027 | 310 | 2% |
| 12-2028 | 323 | 4% |
| 12-2029 | 329 | 2% |
| 12-2030 | 341 | 4% |
| 12-2031 | 358 | 5% |
| 12-2032 | 365 | 2% |
| 12-2033 | 373 | 2% |
| 12-2034 | 390 | 4% |
Net profit margin is expected to improve from 18% in 12-2024 to 18% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 71 | 18% |
| 12-2025 | 50 | 18% |
| 12-2026 | 55 | 18% |
| 12-2027 | 56 | 18% |
| 12-2028 | 58 | 18% |
| 12-2029 | 59 | 18% |
| 12-2030 | 61 | 18% |
| 12-2031 | 64 | 18% |
| 12-2032 | 66 | 18% |
| 12-2033 | 67 | 18% |
| 12-2034 | 70 | 18% |
with a 5-year average of $57 million. Projected CapEx is expected to maintain at approximately 13% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 61 |
| 12-2026 | 62 |
| 12-2027 | 42 |
| 12-2028 | 38 |
| 12-2029 | 40 |
| 12-2030 | 42 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 40 |
| Days Inventory | 1 |
| Days Payables | 28 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 106 | 13 | 27 | (11) | 77 |
| 2026 | 148 | 18 | 40 | 4 | 86 |
| 2027 | 130 | 19 | 40 | 1 | 70 |
| 2028 | 129 | 20 | 42 | (0) | 68 |
| 2029 | 134 | 20 | 43 | 1 | 70 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 10.38 | 48.9% |
| 10-Year DCF (Growth) | 11.18 | 60.4% |
| 5-Year DCF (EBITDA) | 12.60 | 80.8% |
| 10-Year DCF (EBITDA) | 13.00 | 86.5% |
Is Target Hospitality Corp (TH) a buy or a sell? Target Hospitality Corp is definitely a buy. Based on our DCF analysis, Target Hospitality Corp (TH) appears to be significantly undervalued with upside potential of 60.4%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $6.97.