Wyndham Hotels & Resorts, Inc. (NYSE:WH), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$76.88 at one point, and dropping to the lows of US$66.49. 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 Wyndham Hotels & Resorts' current trading price of US$69.33 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Wyndham Hotels & Resorts’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Wyndham Hotels & Resorts worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.1% below my intrinsic value, which means if you buy Wyndham Hotels & Resorts today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $70.84, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Wyndham Hotels & Resorts’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 Wyndham Hotels & Resorts look like?
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. Wyndham Hotels & Resorts' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? WH’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 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 WH, 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.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Be aware that Wyndham Hotels & Resorts is showing 2 warning signs in our investment analysis and 1 of those is a bit unpleasant...
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What are the risks and opportunities for Wyndham Hotels & Resorts?
Earnings are forecast to grow 4.36% per year
Earnings grew by 85.1% over the past year
Significant insider selling over the past 3 months
Has a high level of debt
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.
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