Host Hotels & Resorts Inc (HST, Financial) reported a daily gain of 2.84% and a slight three-month loss of -0.35%. With an Earnings Per Share (EPS) of 1.05, is the stock significantly undervalued? This article explores the intrinsic value of Host Hotels & Resorts (HST) and provides a comprehensive valuation analysis.
Company Overview
Host Hotels & Resorts Inc owns 77 predominantly urban and resort upper-upscale and luxury hotel properties, representing nearly 42,000 rooms, primarily in the United States. With a market cap of $11.60 billion, the company's stock price stands at $16.31 per share, which is significantly lower than the GF Value of $27.51. This discrepancy paves the way for an in-depth exploration of the company's value.
Understanding the GF Value
The GF Value is a proprietary measure that represents the intrinsic value of a stock. It's calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. If a stock's price is significantly above the GF Value Line, it's overvalued, and its future return is likely to be poor. Conversely, if it's significantly below the GF Value Line, its future return will likely be higher.
Host Hotels & Resorts (HST, Financial) Valuation
Host Hotels & Resorts (HST) appears to be significantly undervalued based on the GF Value. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength Analysis
Investing in companies with poor financial strength can lead to a higher risk of permanent capital loss. Host Hotels & Resorts has a cash-to-debt ratio of 0.17, which is better than 74.49% of companies in the REITs industry. GuruFocus ranks the overall financial strength of Host Hotels & Resorts at 6 out of 10, indicating fair financial strength.
Profitability and Growth
Companies with high profit margins are typically safer investments than those with low profit margins. Host Hotels & Resorts has been profitable 8 out of the past 10 years. However, its operating margin of 15.56% ranks worse than 86.07% of companies in the REITs industry. The average annual revenue growth of Host Hotels & Resorts is -2.9%, which ranks worse than 67.92% of companies in the REITs industry. The 3-year average EBITDA growth is -6.6%, which ranks worse than 68.22% of companies in the REITs industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and its weighted average cost of capital (WACC) is another way to assess its profitability. For the past 12 months, Host Hotels & Resorts's ROIC is 6.8, and its cost of capital is 9.59.
Conclusion
In conclusion, the stock of Host Hotels & Resorts (HST, Financial) appears to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. However, its growth ranks worse than 68.22% of companies in the REITs industry. To learn more about Host Hotels & Resorts stock, you can check out its 30-Year Financials here.
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