Stock Analysis

Is It Too Late To Consider Buying Hilton Worldwide Holdings Inc. (NYSE:HLT)?

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NYSE:HLT
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Hilton Worldwide Holdings Inc. (NYSE:HLT) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$130 at one point, and dropping to the lows of US$118. 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 Hilton Worldwide Holdings' current trading price of US$125 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the 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 there are any catalysts for a price change.

View our latest analysis for Hilton Worldwide Holdings

What is Hilton Worldwide Holdings worth?

According to my valuation model, the stock is currently overvalued by about 22%, trading at US$125 compared to my intrinsic value of $102.16. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline 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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Hilton Worldwide Holdings?

earnings-and-revenue-growth
NYSE:HLT Earnings and Revenue Growth June 8th 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. 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 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? It seems like the market has well and truly priced in HLT’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe HLT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HLT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for HLT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Hilton Worldwide Holdings, you'd also look into what risks it is currently facing. For example, we've found that Hilton Worldwide Holdings has 3 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

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Valuation is complex, but we're helping make it simple.

Find out whether Hilton Worldwide Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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