Education
About Us
Working with TipRanks
Follow Us
Target Hospitality (TH)
:TH
Top Page
Target Hospitality
(NASDAQ:TH)
71Outperform
Positive Factors
Financial Performance
Target's 3Q24 total revenue of $95.2M and adjusted EBITDA of $49.7M exceeded expectations.
Guidance Confidence
Target reiterated its 2024 revenue/adjusted EBITDA guidance ranges, indicating confidence in its financial outlook.
Negative Factors
Contract Termination
Target Hospitality received a notice from the U.S. government terminating the existing service agreement for the Pecos Children's Center.
Financial Impact
The Pecos Contract accounts for roughly 70-75% of the projected 2025 EBITDA forecast.
Target Hospitality (TH) vs. S&P 500 (SPY)
Market Cap
$650.83M
Dividend YieldN/A
Average Volume (3M)1.31M
Price to Earnings (P/E)9.3
Beta (1Y)-0.21
Revenue Growth-31.46%
EPS Growth-56.72%
CountryUS
Employees770
SectorIndustrials
Sector Strength63
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.70
Shares Outstanding99,363,920
10 Day Avg. Volume702,645
30 Day Avg. Volume1,307,813
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.38
Price to Cash Flow (P/CF)4.70
P/FCF Ratio4.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.75Price Target Upside33.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Target Hospitality Business Overview & Revenue Model
Company DescriptionTarget Hospitality Corp. operates as a specialty rental and hospitality services company in North America. The company operates through four segments: Hospitality & Facilities Services - South, Hospitality & Facilities Services - Midwest, Government, and TCPL Keystone. It owns a network of specialty rental accommodation units with approximately 15,528 beds across 27 communities, which include 26 owned and 1 leased; and operates 1 community not owned or leased by the company. Target Hospitality Corp. also provides catering and food, maintenance, housekeeping, grounds-keeping, security, health and recreation, workforce community management, concierge, and laundry services. It serves the U.S. government, government contractors, investment grade natural resource development companies, and energy infrastructure companies. The company was founded in 1978 and is headquartered in The Woodlands, Texas.
How the Company Makes MoneyTarget Hospitality makes money through a diversified revenue model centered on providing turnkey accommodations and related services. Key revenue streams include rental income from specialty modular units and lodges, service fees for catering and hospitality management, and long-term contracts with governmental and corporate clients. The company's earnings are bolstered by strategic partnerships with major players in the energy and natural resources sectors, as well as government agencies requiring scalable and flexible lodging solutions. These partnerships often result in multi-year contracts, providing a stable and predictable revenue stream. Additionally, Target Hospitality leverages its expertise in remote site operations to offer premium services that command higher margins, further enhancing its profitability.
Target Hospitality Financial Statement Overview
Summary
Target Hospitality exhibits commendable financial health, characterized by strong profitability, stable financial structure, and excellent cash flow management. The company's ability to maintain high margins and generate significant cash flows despite revenue fluctuations underscores its operational efficiency and financial resilience. Potential risks are mitigated by effective debt management and a strong equity base.Income Statement
Target Hospitality demonstrates robust profitability with a TTM gross profit margin of 45.05% and a net profit margin of 18.46%. The company also shows strong EBIT and EBITDA margins at 28.16% and 40.74% respectively. Despite a decrease in revenue from the previous year, the company maintains healthy margins, indicating efficient cost management and operational effectiveness.85
Very Positive
Balance Sheet
The balance sheet reflects a solid equity position with an equity ratio of 58.01% and a manageable debt-to-equity ratio of 0.43, suggesting financial stability. Return on equity stands at a strong 16.93%, indicating effective use of equity. The company has successfully reduced its net debt, enhancing its financial flexibility and reducing leverage-related risks.78
Positive
Cash Flow
Target Hospitality's cash flow performance is strong, with a substantial operating cash flow to net income ratio of 2.13, indicating excellent cash conversion efficiency. The free cash flow to net income ratio is also robust at 1.79, supported by a notable free cash flow growth. This displays the company's strong cash-generating ability, enabling reinvestment and debt reduction.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 386.27M | 563.61M | 501.99M | 291.34M | 225.15M | Gross Profit |
| 178.18M | 313.32M | 247.13M | 101.35M | 57.16M | EBIT |
| 108.78M | 240.61M | 174.37M | 37.10M | 4.10M | EBITDA |
| 125.10M | 332.62M | 224.29M | 106.35M | 68.11M | Net Income Common Stockholders |
| 71.27M | 173.70M | 73.94M | -4.58M | -27.48M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 190.67M | 103.93M | 181.67M | 23.41M | 6.98M | Total Assets |
| 725.77M | 694.35M | 771.73M | 513.39M | 534.24M | Total Debt |
| 209.65M | 200.83M | 342.50M | 330.21M | 374.50M | Net Debt |
| 18.98M | 96.90M | 160.83M | 306.81M | 367.52M | Total Liabilities |
| 304.68M | 317.05M | 570.88M | 416.12M | 434.82M | Stockholders Equity |
| 421.08M | 377.31M | 200.85M | 97.27M | 99.42M |
| Cash Flow | Free Cash Flow | |||
| 151.68M | 88.38M | 185.32M | 69.11M | 34.60M | Operating Cash Flow |
| 151.68M | 156.80M | 305.61M | 104.60M | 46.78M | Investing Cash Flow |
| -28.84M | -68.18M | -140.23M | -35.91M | -10.95M | Financing Cash Flow |
| -36.06M | -166.37M | -7.10M | -52.27M | -35.68M |
Target Hospitality Technical Analysis
Negative
6.55
Price Trends
7.37
Negative
8.29
Negative
8.52
Negative
Market Momentum
-0.23
Negative
50.75
Neutral
74.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TH, the sentiment is Negative. The current price of 6.55 is above the 20-day moving average (MA) of 6.14, below the 50-day MA of 7.37, and below the 200-day MA of 8.52, indicating a neutral trend. The MACD of -0.23 indicates Negative momentum. The RSI at 50.75 is Neutral, neither overbought nor oversold. The STOCH value of 74.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TH.
Target Hospitality Risk Analysis
Target Hospitality disclosed 40 risk factors in its most recent earnings report. Target Hospitality reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Target Hospitality Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $650.83M | 9.32 | 17.85% | ― | -31.46% | -56.72% | |
66 Neutral | $590.04M | 10.18 | 5.92% | ― | 28.76% | -9.56% | |
63 Neutral | $285.07M | 15.53 | 8.47% | 4.88% | -3.23% | ― | |
62 Neutral | $7.26B | 12.38 | 3.01% | 3.40% | 3.58% | -14.13% | |
61 Neutral | $297.65M | 19.41 | -6.13% | 4.59% | -2.67% | -160.35% | |
57 Neutral | $700.35M | 40.58 | 6.78% | ― | 8.60% | 42.67% | |
46 Neutral | $567.56M | ― | -451.56% | ― | 24.73% | -219.97% |
* Industrials Sector Average
Performance Comparison
TH
Target Hospitality
6.55
-4.33
-39.80%
AMRC
Ameresco
10.82
-12.09
-52.77%
TRNS
Transcat
75.23
-32.81
-30.37%
LXFR
Luxfer
10.07
0.11
1.10%
CVEO
Civeo
21.80
-4.91
-18.38%
RDW
Redwire
7.51
3.10
70.29%
Target Hospitality Earnings Call Summary
Earnings Call Date: Mar 26, 2025 | % Change Since: 6.85% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements such as the Dilley contract award and strong financial management including senior notes redemption and maintaining a strong cash position. However, there were notable challenges, particularly in the government segment with revenue decreases and contract terminations. Despite these challenges, the company is actively pursuing growth opportunities, indicating a strategic focus on diversification and resilience.Highlights
Dilley Contract Award
Re-contracted Dilley assets under a new contract expected to provide over $246 million of revenue over its anticipated five-year term.
Lithium Americas Workforce Hub Contract
Finalized a multi-year workforce hub contract supporting Lithium Americas' development of the Thacker Pass, exemplifying strategic diversification initiatives.
Strong Cash Position and No Net Debt
Ended the quarter with $191 million in cash and $366 million in total liquidity with 0 borrowings under the company's $175 million revolving credit facility.
Senior Notes Redemption
Redeemed all outstanding senior notes due June 2025, resulting in expected annual interest expense savings of $19.5 million.
Lowlights
Government Segment Revenue Decrease
Government segment produced quarterly revenue of approximately $44 million, a decrease primarily due to lower PCC variable services revenue and contract terminations.
PCC Contract Termination
Target's contract for the PCC community was canceled effective February 21st, 2025, leading to carrying costs of approximately $2 million to $3 million per quarter.
South Texas Family Residential Center Contract Termination
The contract was terminated effective August 9th, 2024, impacting government segment revenue.
Company Guidance
During the Target Hospitality Fourth Quarter and Full Year 2024 Earnings Call, the company provided guidance for 2025, projecting total revenue between $265 million and $285 million and adjusted EBITDA between $47 million and $57 million. The call highlighted the reactivation of the Dilley community, expected to generate over $246 million in revenue over a five-year term, and discussed the termination of the South Texas Family Residential Center contract. The company ended 2024 with $191 million in cash and a net leverage ratio of 0.0 times, having returned approximately $33 million to shareholders. Additionally, Target Hospitality redeemed its outstanding senior notes, resulting in anticipated annual interest expense savings of $19.5 million. Looking ahead, the company plans to maintain a focus on strategic growth initiatives and disciplined capital allocation to support its resilient business model.Target Hospitality Corporate Events
Executive/Board ChangesPrivate Placements and FinancingBusiness Operations and Strategy
Target Hospitality Amends Credit Agreement and Updates Executive Compensation
Neutral
Feb 28, 2025
In February 2025, Target Hospitality Corp. and its subsidiaries amended their ABL Credit Agreement to adjust the maturity provisions related to their 2025 Senior Secured Notes, extending the maturity date to March 31, 2025. This adjustment is part of their financial strategy to manage debt obligations effectively. Additionally, the company introduced new executive stock unit agreements under its 2019 Incentive Plan, contingent on shareholder approval. These agreements aim to retain and incentivize key executives, with performance-based vesting linked to share price targets, reflecting a strategic focus on aligning executive compensation with shareholder value.
Business Operations and StrategyFinancial Disclosures
Target Hospitality’s Pecos Center Contract Terminated
Negative
Feb 24, 2025
On February 24, 2025, Target Hospitality announced the termination of its Pecos Children’s Center services agreement by its nonprofit partner, effective February 21, 2025. This led to the withdrawal of its preliminary 2025 financial outlook. Despite the contract termination, Target plans to re-market its modular assets and pursue growth opportunities, particularly in supporting U.S. government immigration policies.
Business Operations and Strategy
Target Hospitality Announces Major Workforce Housing Agreement
Positive
Feb 18, 2025
On February 18, 2025, Target Hospitality announced a multi-year agreement with Lithium Americas Corp. to construct and manage a workforce housing community near the Thacker Pass Project in Nevada. This project is expected to generate approximately $140 million in revenue over its initial term and supports Target’s strategic diversification and regional expansion efforts, enhancing its business fundamentals and financial outlook for 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.