Should You Think About Buying H World Group Limited (NASDAQ:HTHT) Now?

H World Group Limited (NASDAQ:HTHT) saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. 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. However, what if the stock is still a bargain? Let’s take a look at H World Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for H World Group

Is H World Group Still Cheap?

According to my valuation model, H World Group seems to be fairly priced at around 17.03% above my intrinsic value, which means if you buy H World Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $35.65, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because H World 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 H World 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. In H World Group's case, its revenues over the next few years are expected to grow by 51%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger 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 HTHT’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on HTHT, 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 want to dive deeper into H World Group, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for H World Group (of which 1 doesn't sit too well with us!) you should know about.

If you are no longer interested in H World 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.