Choice Hotels International, Inc. (NYSE:CHH), which is in the hospitality business, and is based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Choice Hotels International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Choice Hotels International worth?
According to my valuation model, Choice Hotels International seems to be fairly priced at around 18.20% above my intrinsic value, which means if you buy Choice Hotels International today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $87.51, there’s only an insignificant downside when the price falls to its real value. Furthermore, Choice Hotels International’s low beta implies that the stock is less volatile than the wider market.
What does the future of Choice Hotels International 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. With profit expected to grow by a double-digit 18% over the next couple of years, the outlook is positive for Choice Hotels International. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? CHH’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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on CHH, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Choice Hotels International. You can find everything you need to know about Choice Hotels International in the latest infographic research report. If you are no longer interested in Choice Hotels International, 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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