Is it too late to consider buying Choice Hotels International, Inc. (NYSE:CHH)?

Choice Hotels International, Inc. (NYSE:CHH) may not be a large-cap stock, but its stock has seen some significant moves over the past few months on the New York Stock Exchange, reaching highs of $130 US and falling back to lows of US$110. Certain stock price movements can give investors a better opportunity to enter the stock and potentially buy at a lower price. It’s worth asking whether Choice Hotels International’s current price of US$115 reflects the true value of the mid-cap company. Or is it currently undervalued, giving us an opportunity to buy? Let’s take a look at Choice Hotels International’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 Choice Hotels International

What is Choice Hotels International worth?

The stock currently seems fairly valued according to our valuation model. It’s trading about 6.0% below our intrinsic value, which means if you buy Choice Hotels International today, you’ll be paying a fair price for it. And if you think the company’s true value is $122.73, then there isn’t much room for the stock price to rise beyond what it’s currently trading. So, is there another chance to buy low in the future? Since Choice Hotels International stock is quite volatile (meaning its price movements are magnified relative to the rest of the market), this could mean the price can fall, giving us the opportunity to buy later. This is based on its high beta, which is a good indicator of stock price volatility.

What does the future look like for Choice Hotels International?

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Although value investors argue that it’s the intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. Choice Hotels International’s profits over the next few years are expected to increase by 62%, which suggests a very optimistic future. This should lead to more robust cash flows, translating into a higher stock market value.

What this means for you

Are you a shareholder? It appears the market has already priced in CHH’s positive outlook, with shares trading around fair value. However, there are also other important factors that we haven’t considered today, such as the background of its management team. Have these factors changed since you last looked at the stock? Will you have enough conviction to buy if the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on CHH, now may not be the most advantageous time to buy, given that it’s trading around fair value. However, the optimistic outlook is encouraging for the company, meaning it is worth taking a closer look at other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to learn more about Choice Hotels International as a company, it’s important to be aware of the risks it faces. While conducting our analysis, we found that Choice Hotels International has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Choice Hotels International, you can use our free platform to consult our list of more than 50 other stocks with high growth potential.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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