Does Meituan’s Share Price Hide Opportunity After 7% Weekly Gain and Ongoing Regulatory Changes?

• Ever wondered if Meituan’s current share price might actually hold some untapped value? Let’s look at what has been driving the conversation around this stock lately.
• Despite one-week gains of 7.3 percent and a 2.5 percent increase over the past month, Meituan’s shares are still down over 30 percent year to date and off by nearly 40 percent in the past year.
• Recent news has centered on China’s fluctuating consumer demand and evolving regulatory changes impacting the internet sector. These factors continue to weigh on big platform stocks. Market watchers have been eyeing Meituan’s ability to adapt as analysts debate whether sentiment can shift.
• As for valuation, Meituan earns a 4 out of 6 on our value checks, suggesting there may still be interesting opportunities worth your attention. We will break down some of the most common approaches to valuing Meituan shortly, so stay with us to see a potentially smarter way to look at valuation by the end of the article.

Find out why Meituan's -39.2% return over the last year is lagging behind its peers.

Approach 1: Meituan Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to their value today. This approach helps investors determine whether a stock is overpriced or underpriced relative to its potential to generate future cash.

For Meituan, the current trailing twelve months free cash flow stands at around CN¥38.99 billion. Analysts forecast notable growth in free cash flow, with projections reaching CN¥56.29 billion by the end of 2028. Over the next decade, estimates (both analyst and extrapolated) suggest steady yearly increases, culminating in an anticipated free cash flow of CN¥115.5 billion by 2035. All projections are in Chinese Yuan, Meituan’s reporting currency.

Based on these projections, the DCF model calculated an intrinsic fair value estimate of HK$242.94 per share. Given the current market price, this implies Meituan stock is currently 57.8% undervalued.

For investors seeking value, this substantial discount highlights Meituan as a potential opportunity with considerable upside if growth targets are achieved.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Meituan is undervalued by 57.8%. Track this in your watchlist or portfolio, or discover 920 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Meituan.

Approach 2: Meituan Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like Meituan, as it relates the company’s market value to its earnings. This ratio helps investors gauge whether a stock’s price accurately reflects its earnings potential.

Growth expectations and risks associated with a company play a significant role in determining what constitutes a “normal” or “fair” PE ratio. Companies with higher growth prospects or lower risk profiles often trade at higher PE multiples, while those facing more uncertainty or slower growth typically deserve lower multiples.

Meituan currently trades at a PE ratio of 19.3x, which is above the Hospitality industry average of 16.6x but well below the average of its listed peers at 31.3x. In addition, Simply Wall St’s proprietary Fair Ratio, which takes account of factors like Meituan’s projected earnings growth, industry sector, profit margins, market size, and risk profile, sits at 34.8x.

The Fair Ratio provides a more nuanced benchmark than simply using peer or industry averages because it adjusts for the unique circumstances affecting Meituan. It weighs elements such as expected growth and competitive risks, highlighting a more tailored valuation picture for investors.

Given that Meituan’s current PE of 19.3x is well below its Fair Ratio of 34.8x, the stock appears to be undervalued using this approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Meituan Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple tool that lets you define your perspective on Meituan. In other words, you connect the company’s business story, your beliefs about its future revenue, profit margins, and risks directly to a financial forecast and a fair value estimate.

Instead of relying solely on standard formulas, Narratives allow you to personalize your view of Meituan and see how your unique outlook translates into numbers. This approach links what you know about the company and industry (“the story”) to the data: your forecast and what you think is a fair price.

Accessible on Simply Wall St’s Community page (used by millions of investors), Narratives make it easy to compare your fair value to the current share price and decide whether to buy, hold, or sell at any moment.

Because Narratives update dynamically whenever new news or earnings are released, you can stay on top of Meituan’s value as information changes. This allows you to make decisions that are genuinely data-driven and tailored to your outlook.

For example, right now, the most optimistic Narrative on Meituan sees a fair value of over HK$300, while the most cautious puts it at just HK$78, showing just how much perspectives and fair value estimates can differ across investors.

Do you think there's more to the story for Meituan? Head over to our Community to see what others are saying!

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.

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