Is InterContinental Hotels Group PLC (LON:IHG) Potentially Undervalued?

Let's talk about the popular InterContinental Hotels Group PLC (LON:IHG). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the LSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at InterContinental Hotels Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for InterContinental Hotels Group

What Is InterContinental Hotels Group Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 1.14% above our intrinsic value, which means if you buy InterContinental Hotels Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £77.87, there’s only an insignificant downside when the price falls to its real value. What's more, InterContinental Hotels Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of InterContinental Hotels Group look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. InterContinental Hotels Group's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in IHG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on IHG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about InterContinental Hotels Group as a business, it's important to be aware of any risks it's facing. For example - InterContinental Hotels Group has 2 warning signs we think you should be aware of.

If you are no longer interested in InterContinental Hotels Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.