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Should You Think About Buying Hyatt Hotels Corporation (NYSE:H) Now?

Simply Wall St
·3 min read

Hyatt Hotels Corporation (NYSE:H), might not be a large cap stock, but it saw a double-digit share price rise of over 10% 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 Hyatt Hotels’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Hyatt Hotels

What's the opportunity in Hyatt Hotels?

Hyatt Hotels appears to be overvalued by 35% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$53.36 on the market compared to my intrinsic value of $39.62. This means that the opportunity to buy Hyatt Hotels at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Hyatt Hotels’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.

Can we expect growth from Hyatt Hotels?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. Though in the case of Hyatt Hotels, it is expected to deliver a highly negative earnings growth in the next few years, 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? If you believe H 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. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. 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 H for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've found that Hyatt Hotels has 3 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Hyatt Hotels, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.