Stock Analysis
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When Should You Buy Wyndham Hotels & Resorts, Inc. (NYSE:WH)?
Wyndham Hotels & Resorts, Inc. (NYSE:WH), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. 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. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Wyndham Hotels & Resorts’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Wyndham Hotels & Resorts
What's the opportunity in Wyndham Hotels & Resorts?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.0% 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 the company’s true value is $67.58, then there isn’t much room for the share price grow beyond what it’s currently trading. 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.
Can we expect growth from Wyndham Hotels & Resorts?
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 Wyndham Hotels & Resorts' case, its revenues over the next few years are expected to grow by 80%, indicating a highly 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? 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 an eye on WH, now may not be the most advantageous 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Wyndham Hotels & Resorts, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for Wyndham Hotels & Resorts (1 shouldn't be ignored!) that we believe deserve your full attention.
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What are the risks and opportunities for Wyndham Hotels & Resorts?
Wyndham Hotels & Resorts, Inc. operates as a hotel franchisor worldwide.
Rewards
Earnings are forecast to grow 4.36% per year
Earnings grew by 85.1% over the past year
Risks
Significant insider selling over the past 3 months
Has a high level of debt
Further research on
Wyndham Hotels & Resorts
This article by Simply Wall St is general in nature. 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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About NYSE:WH
Wyndham Hotels & Resorts
Wyndham Hotels & Resorts, Inc. operates as a hotel franchisor worldwide.
Solid track record with mediocre balance sheet.
