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

Hilton Worldwide Holdings Inc. (NYSE:HLT) had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of US$147 to US$156. However, is this the true valuation level 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.

Check out 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 19% below my intrinsic value, which means if you buy Hilton Worldwide Holdings today, you’d be paying a fair price for it. And if you believe the company’s true value is $181.18, 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 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. 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. Hilton Worldwide Holdings' earnings over the next few years are expected to increase by 58%, 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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on HLT, now may not be the most optimal 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. In terms of investment risks, we've identified 2 warning signs with Hilton Worldwide Holdings, and understanding them should be part of your investment process.

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.