Target Hospitality Corp. (TH): fair value, margin of safety and Wheel Score

Is TH undervalued?

Target Hospitality Corp. (TH) closed at 17.26 on 16 Oct 2026, 17% above the GLS average fair value of 14.81. Only 1 of the 2 models that produced a number value the shares above the current price. The margin of safety is negative, so the stock fails the "below fair value" rule of the Sunday Scan; a premium of this size is common for companies whose growth the models are conservative about.

Only 2 of the nine models produced a value (DCF, 10 Cap); the others need a dividend, positive free cash flow or positive book value the company does not have yet, so the average rests on a narrow base.

The nightly engine files TH under Speculative / Distressed - negative earnings or a Piotroski score of 3 or less - which caps its Wheel Score at 45 and keeps it out of the Sunday Scan.

Nine valuation models for TH

Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.

Quality and financial health

Financial health is average - TH passes 5 of the nine Piotroski tests, which falls one point short of the Sunday Scan's "6 or more" rule. The Financials tab on the Quote page shows which tests fail. The GLS Moat score is low at 1.6 out of 10, which says the ten-year record of revenue, earnings, margins and returns on capital has been inconsistent - growth and shocks rather than steady compounding.

Returns on capital are thin or negative - ROIC -9.3%, ROE -9.5%, ROA -7.0% - with debt at 0.03 times equity and a free-cash-flow yield of 5.2%.

Target Hospitality Corp. pays no dividend, so the DDM model does not apply and a covered-call holder earns only the premium and any price gain. Revenue comes mainly from Service 63%, Hotel 37% (quarter Q2 FY2026).

Institutional ownership scores 6/10, insider activity 1/10 and Congressional trading 5/10 on the GLS smart-money scales.

Wheel Score 45: Weak

TH scores 45 out of 100 on the Wheel Score, in the Weak band (under 50), capped at 45 because the engine files it as Speculative / Distressed. Value 6/25, Health 11/20, Moat 2/15, Premium 18/20, Stability 16/20. The score is not a judgement on the company; it says the price, quality and premium do not line up for selling puts on it today.

Implied volatility is 68% on the near-the-money contracts 20-60 days out - above the 60% ceiling of the sweet spot. Premiums are large, but the Wheel Score tapers the Premium points (18 of 20) because volatility this high usually comes with a reason. Chain open interest is 32,848 contracts across all expiries - enough for the wheel at normal size.

Volume runs at 1.8M shares a day on a market cap of $1.7B, with a beta of 1.50 - a high beta, so the stock tends to move more than the market and a strike can be gapped through; the Stability part of the Wheel Score gives that 16 of 20.

The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.

Upcoming events

The next earnings report is due on 5 Nov 2026 (before the open), 20 days away; a 30-45-day put sold today would expire after it, which is worth weighing against the premium.

Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.

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