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Playa Hotels & Resorts N.V. (NASDAQ:PLYA), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$7.67 and falling to the lows of US$6.91. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Playa Hotels & Resorts' current trading price of US$7.26 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Playa Hotels & Resorts’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Playa Hotels & Resorts
What Is Playa Hotels & Resorts Worth?
Playa Hotels & Resorts is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Playa Hotels & Resorts’s ratio of 26.1x is above its peer average of 21.17x, which suggests the stock is trading at a higher price compared to the Hospitality industry. But, is there another opportunity to buy low in the future? Since Playa Hotels & Resorts’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Playa Hotels & Resorts?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. In the upcoming year, Playa Hotels & Resorts' earnings are expected to increase by 59%, 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 well and truly priced in PLYA’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe PLYA should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.