DiamondRock Hospitality Company (NYSE:DRH), a reits company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $12.01 and falling to the lows of $10.83. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether DiamondRock Hospitality’s current trading price of $11.11 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 DiamondRock Hospitality’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for DiamondRock Hospitality
What is DiamondRock Hospitality worth?
Good news, investors! DiamondRock Hospitality is still a bargain right now. According to my valuation, the intrinsic value for the stock is $15.17, but it is currently trading at US$11.11 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, DiamondRock Hospitality’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of DiamondRock Hospitality look like?
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. However, with a relatively muted profit growth of 6.43% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for DiamondRock Hospitality, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since DRH is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on DRH for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy DRH. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on DiamondRock Hospitality. You can find everything you need to know about DiamondRock Hospitality in the latest infographic research report. If you are no longer interested in DiamondRock Hospitality, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.