Yahoo Finance Why InterContinental Hotels Group PLC (LON:IHG) Could Be Worth Watching
Let's talk about the popular InterContinental Hotels Group PLC (LON:IHG). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the LSE. As a large-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 InterContinental Hotels Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for InterContinental Hotels Group
What's the opportunity in InterContinental Hotels Group?
According to my valuation model, InterContinental Hotels Group seems to be fairly priced at around 10% below my intrinsic value, which means if you buy InterContinental Hotels Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth £62.1, then there’s not much of an upside to gain from mispricing. What's more, InterContinental Hotels Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will InterContinental Hotels Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. InterContinental Hotels Group’s earnings over the next few years are expected to increase by 89%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in IHG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on IHG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 InterContinental Hotels Group. You can find everything you need to know about InterContinental Hotels Group in the latest infographic research report. If you are no longer interested in InterContinental Hotels Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
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. Thank you for reading.
