Should You Investigate InterContinental Hotels Group PLC (LON:IHG) At UK£101?

InterContinental Hotels Group PLC (LON:IHG) received a lot of attention from a substantial price increase on the LSE over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine InterContinental Hotels Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for InterContinental Hotels Group

Is InterContinental Hotels Group Still Cheap?

According to our valuation model, InterContinental Hotels Group seems to be fairly priced at around 16.29% 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 that the stock is really worth £87.24, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, InterContinental Hotels Group has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will InterContinental Hotels Group generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 45%, 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 diving deeper into 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. In terms of investment risks, we've identified 2 warning signs with InterContinental Hotels Group, and understanding these should be part of your investment process.

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.