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When Should You Buy RLJ Lodging Trust (NYSE:RLJ)?

Simply Wall St

RLJ Lodging Trust (NYSE:RLJ), which is in the reits business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of US$18.14 and falling to the lows of US$16.33. 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 RLJ Lodging Trust's current trading price of US$16.83 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 RLJ Lodging Trust’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for RLJ Lodging Trust

What is RLJ Lodging Trust worth?

Great news for investors – RLJ Lodging Trust is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $22.68, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because RLJ Lodging Trust’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 RLJ Lodging Trust look like?

NYSE:RLJ Past and Future Earnings, January 9th 2020

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. Though in the case of RLJ Lodging Trust, it is expected to deliver a negative earnings growth of -2.8%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although RLJ is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to RLJ, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on RLJ for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on RLJ Lodging Trust. You can find everything you need to know about RLJ Lodging Trust in the latest infographic research report. If you are no longer interested in RLJ Lodging Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.