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Sunstone Hotel Investors, Inc. (NYSE:SHO), which is in the reits business, and is based in United States, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of US$13.17 to US$14.41. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sunstone Hotel Investors’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Sunstone Hotel Investors worth?
Great news for investors – Sunstone Hotel Investors is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $18.50, but it is currently trading at US$13.60 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Sunstone Hotel Investors’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 Sunstone Hotel Investors look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Sunstone Hotel Investors, at least in the near future.
What this means for you:
Are you a shareholder? Although SHO is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to SHO, 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 tabs on SHO for some time, 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 Sunstone Hotel Investors. You can find everything you need to know about Sunstone Hotel Investors in the latest infographic research report. If you are no longer interested in Sunstone Hotel Investors, 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 firstname.lastname@example.org. 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.
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