Stock Analysis

At US$129, Is It Time To Put Hilton Worldwide Holdings Inc. (NYSE:HLT) On Your Watch List?

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NYSE:HLT
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Today we're going to take a look at the well-established Hilton Worldwide Holdings Inc. (NYSE:HLT). The company's stock saw a decent share price growth in the teens level on the NYSE over the last few months. 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. But what if there is still an opportunity to buy? Let’s examine Hilton Worldwide Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Hilton Worldwide Holdings

What is Hilton Worldwide Holdings worth?

According to my valuation model, Hilton Worldwide Holdings seems to be fairly priced at around 0.1% below my intrinsic value, which means if you buy Hilton Worldwide Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $128.97, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Hilton Worldwide Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Hilton Worldwide Holdings look like?

earnings-and-revenue-growth
NYSE:HLT Earnings and Revenue Growth September 21st 2021

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. In Hilton Worldwide Holdings' case, its revenues over the next couple of years are expected to double, indicating an incredibly 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? HLT’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 track record of its management team. 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 HLT, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

So while earnings quality is important, it's equally important to consider the risks facing Hilton Worldwide Holdings at this point in time. When we did our research, we found 2 warning signs for Hilton Worldwide Holdings (1 is significant!) that we believe deserve your full attention.

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What are the risks and opportunities for Hilton Worldwide Holdings?

Hilton Worldwide Holdings Inc., a hospitality company, owns, leases, manages, develops, and franchises hotels and resorts.

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Rewards

  • Trading at 11.2% below our estimate of its fair value

  • Earnings are forecast to grow 14.55% per year

  • Earnings grew by 2653.8% over the past year

Risks

  • Debt is not well covered by operating cash flow

  • Negative shareholders equity

  • Significant insider selling over the past 3 months

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Hilton Worldwide Holdings

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