Is Hilton Worldwide Holdings Inc. (NYSE:HLT) Potentially Undervalued?

Let's talk about the popular Hilton Worldwide Holdings Inc. (NYSE:HLT). The company's shares saw a decent share price growth of 19% on the NYSE over the last few months. The recent jump in the share price has meant that the company is trading around its 52-week high. 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 take a look at Hilton Worldwide Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Hilton Worldwide Holdings

What Is Hilton Worldwide Holdings Worth?

According to our valuation model, Hilton Worldwide Holdings seems to be fairly priced at around 16.77% above our intrinsic value, which means if you buy Hilton Worldwide Holdings today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $214.46, 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 Hilton Worldwide Holdings’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 Hilton Worldwide Holdings generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Hilton Worldwide Holdings' earnings over the next few years are expected to increase by 84%, 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? It seems like the market has already priced in HLT’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 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 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 Hilton Worldwide Holdings at this point in time. For example, we've found that Hilton Worldwide Holdings has 2 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Hilton Worldwide Holdings, 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.