TH
Target Hospitality Corp.
$16.87
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 40.6% above fair value
You pay
$16.87
Bear
$9.30
Fair
$12.00
Bull
$14.55
Bear
$9.30
-44.9%
5% stage 1 growth, 12% discount
Fair
$12.00
-28.9%
9% stage 1 growth, 12% discount
Bull
$14.55
-13.8%
12% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
34%
Implied Market Multiple
27.8x
Market is pricing in (growth)
15.3%
vs 8.8% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $18.00 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $12.00 per share.
Warnings
This company spends 21% of revenue on big investments like data centers and infrastructure, mostly for growth. We adjusted the cash flow figure to only subtract the upkeep costs, giving a clearer picture of true profitability.
Wall Street's average price target is $18.00 (from 6 analysts). Our estimate is 42% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions