Is Target Hospitality Corp. overvalued or undervalued?

As of 22 August 2025, the valuation grade for Target Hospitality Corp. has moved from attractive to expensive, indicating a shift towards overvaluation. The company is currently considered overvalued based on its P/E ratio of 15, which is significantly lower than its peer Norwegian Cruise Line Holdings Ltd. at 14.40, but higher than Wyndham Hotels & Resorts, Inc. at 20.98. Additionally, the EV to EBITDA ratio stands at 4.83, while peers like Hyatt Hotels Corp. and Vail Resorts, Inc. have ratios of 18.17 and 10.33, respectively, suggesting that Target Hospitality is not competitively priced within its industry.
Despite a strong historical performance with a 5-year return of 536.30%, the recent stock performance has lagged behind the S&P 500, with a year-to-date return of -11.12% compared to the index's 12.22%. This underperformance, along with the elevated valuation metrics, reinforces the conclusion that Target Hospitality Corp. is currently overvalued.