Stock Analysis

Why Hilton Worldwide Holdings Inc. (NYSE:HLT) Could Be Worth Watching

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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 double-digit share price rise of over 10% in the past couple of months on the NYSE. 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, could the stock still be trading at a relatively cheap price? 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.

View our latest analysis for Hilton Worldwide Holdings

Is Hilton Worldwide Holdings still cheap?

The stock is currently trading at US$117 on the share market, which means it is overvalued by 27% compared to my intrinsic value of $92.17. This means that the opportunity to buy Hilton Worldwide Holdings at a good price has disappeared! But, is there another opportunity 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 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 February 20th 2021

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 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 above its fair value. At this current price, shareholders may be asking a different question – should I 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 optimistic prospect is encouraging for HLT, which means it’s worth diving deeper into other factors 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 3 warning signs for Hilton Worldwide Holdings (1 makes us a bit uncomfortable!) 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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Share Price

Market Cap

1Y Return

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Further research on
Hilton Worldwide Holdings

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