Is Now The Time To Look At Buying Choice Hotels International, Inc. (NYSE:CHH)?

Choice Hotels International, Inc. (NYSE:CHH), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$134 and falling to the lows of US$110. 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 Choice Hotels International's current trading price of US$111 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Choice Hotels International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Choice Hotels International

Is Choice Hotels International Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.37% above my intrinsic value, which means if you buy Choice Hotels International today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $110.45, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Choice Hotels International’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Choice Hotels International 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. With profit expected to grow by 45% over the next couple of years, the future seems bright for Choice Hotels International. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? CHH’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 CHH, now may not be the most advantageous 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.

So while earnings quality is important, it's equally important to consider the risks facing Choice Hotels International at this point in time. In terms of investment risks, we've identified 1 warning sign with Choice Hotels International, and understanding this should be part of your investment process.

If you are no longer interested in Choice Hotels International, 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.