Is Now The Time To Look At Buying InterContinental Hotels Group PLC (LON:IHG)?

InterContinental Hotels Group PLC (LON:IHG) saw significant share price movement during recent months on the LSE, rising to highs of £46.92 and falling to the lows of £42.41. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether InterContinental Hotels Group's current trading price of £45.53 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the 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 there are any catalysts for a price change.

Check out our latest analysis for InterContinental Hotels Group

What's the opportunity in InterContinental Hotels Group?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16% below my intrinsic value, which means if you buy InterContinental Hotels Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth £54.01, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because InterContinental Hotels Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will InterContinental Hotels Group generate?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. InterContinental Hotels Group’s earnings over the next few years are expected to increase by 100%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? IHG’s optimistic future growth appears to have been factored into the current share price, 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.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on InterContinental Hotels Group. You can find everything you need to know about InterContinental Hotels Group in the latest infographic research report. If you are no longer interested in InterContinental Hotels Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.