Stock Analysis

Why Wyndham Hotels & Resorts, Inc. (NYSE:WH) Could Be Worth Watching

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NYSE:WH
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While Wyndham Hotels & Resorts, Inc. (NYSE:WH) might not be the most widely known stock at the moment, 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 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's the opportunity in Wyndham Hotels & Resorts?

The stock is currently trading at US$73.21 on the share market, which means it is overvalued by 25% compared to my intrinsic value of $58.69. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline 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 another chance to buy in the future. 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?

earnings-and-revenue-growth
NYSE:WH Earnings and Revenue Growth May 11th 2021

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. 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. In Wyndham Hotels & Resorts' 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? It seems like the market has well and truly priced in WH’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe WH 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 an eye on WH for a while, 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 positive outlook is encouraging for WH, which means it’s worth diving deeper into other factors 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. For instance, we've identified 2 warning signs for Wyndham Hotels & Resorts (1 is concerning) you should be familiar with.

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Valuation is complex, but we're helping make it simple.

Find out whether Wyndham Hotels & Resorts is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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