- United States
Is There Now An Opportunity In Wyndham Hotels & Resorts, Inc. (NYSE:WH)?
Wyndham Hotels & Resorts, Inc. (NYSE:WH), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. As a mid-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 examine Wyndham Hotels & Resorts’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Wyndham Hotels & Resorts
What Is Wyndham Hotels & Resorts Worth?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Wyndham Hotels & Resorts’s ratio of 19.82x is trading slightly above its industry peers’ ratio of 19.22x, which means if you buy Wyndham Hotels & Resorts today, you’d be paying a relatively reasonable price for it. And if you believe Wyndham Hotels & Resorts should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Although, there may be an opportunity to buy in the future. This is because Wyndham Hotels & Resorts’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 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. 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. With profit expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Wyndham Hotels & Resorts. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in WH’s positive outlook, with shares trading around industry price multiples. 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 WH? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on WH, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for WH, 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. Case in point: We've spotted 3 warning signs for Wyndham Hotels & Resorts you should be aware of.
If you are no longer interested in Wyndham Hotels & Resorts, 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.
Wyndham Hotels & Resorts
Wyndham Hotels & Resorts, Inc. operates as a hotel franchisor worldwide.
Solid track record and good value.