Investor day and buyback expansion put Hyatt Hotels (H) in focus

Hyatt Hotels (H) has moved into the spotlight after its recent investor day and a decision to expand its equity buyback authorization by US$1.0b to US$4.555b.

Hyatt’s investor day and the expanded buyback plan appear to have coincided with building momentum, with the stock’s 30 day share price return of 15.19% contributing to a 46.12% total shareholder return over the past year.

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With Hyatt’s share price near analyst targets and the stock already up sharply over the past year, the key question now is whether the recent buyback and investor day have unlocked a fresh buying opportunity, or if markets are already pricing in future growth.

Most Popular Narrative: 20% Undervalued

Hyatt's most followed narrative puts fair value at $193.52, almost exactly in line with the last close of $193.06, yet still flags a modest discount.

The analysts have a consensus price target of $193.52 for Hyatt Hotels based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $221.0, and the most bearish reporting a price target of just $160.0.

Behind that tight gap between price and fair value sit punchy revenue assumptions, a sharp swing into profitability, and a rich future earnings multiple. It is worth examining which moving parts really carry the most weight in this story.

Result: Fair Value of $193.52 (UNDERVALUED)

However, you still need to weigh softer booking trends in upscale segments, as well as potential delays or hurdles around the Playa acquisition, when judging how resilient this story is.

Another View: Revenue Multiple Sends A Caution Flag

While the analyst and SWS models point to fair value near $193.52, Hyatt trades on a P/S ratio of 5.3x. That is much higher than the US Hospitality industry at 1.7x, the peer average at 3.1x, and even the SWS fair ratio of 4.2x. This suggests less room for error if sentiment turns.

To see what the numbers say when price is stacked up against sales, valuation and peers, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment split between risks and rewards, it makes sense to move quickly and test the story against your own expectations using the 2 key rewards and 2 important warning signs

Ready for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.