Is Ashford (AINC) Stock a Bargain Right Now? – November 23, 2022

, Tips & Picks

Market volatility this year may have some investors looking to rebalance their portfolios. When buying stocks, one might often look for companies that appear to be trading at discounts.

Ashford Inc. (AINC Free Report) stock is worthy of consideration for those looking for a discount. AINC currently sports a Zacks Rank #1 (Strong Buy) with earnings estimate revisions trending higher. The Financial-Investment Management Industry is also in the top 39% of all Zacks Industries. Even better, AINC has an overall “A” VGM grade for its combined Style Score of Value, Growth, and Momentum.

Company Overview

Ashford Inc. provides asset management among other services to companies in the hospitality industry. The company manages real estate, hospitality, and securities platforms. Ashford is the advisor to two real estate investment trusts (REITs), Ashford Hospitality Trust (Ashford Trust) and Ashford Hospitality Prime (Ashford Prime).

After completing a spinoff from Ashford Hospitality Trust, Inc. (AHT Free Report) in November 2014, AINC began trading as its own stand-alone company.

Outlook

Year over year, AINC earnings are expected to climb 22% in 2022 at $6.36 per share. This is up from $5.60 a share 90 days ago. Fiscal 2023 earnings are expected to decline -10% after an impressive and tough-to-follow year. However, FY23 earnings estimates have also gone higher to $5.73 per share from $5.20 last quarter.

Top line growth is expected, with sales set to jump 64% in 2022 to $636.70 million compared to $388.48 million in 2021. FY23 sales are expected to rise another 11%.

Performance & Valuation

Since its split from Ashford Trust, AINC is down -77% to underperform the benchmark and its Zacks Subindustry’s -18%. But past performance is no guarantee of the future. Year to date, AINC is down -13% to slightly outperform the S&P 500’s -17%. This has also outperformed the Financial-Investment Management Markets -18%.

The stock has climbed roughly 7% in Q4. And AINC might look like a bargain as it still trades 37% from its highs of $23.60 per share seen around this time last November.

Image Source: Zacks Investment Research

With that being said, the stock is starting to look undervalued at current levels when considering its earnings potential. Trading at $14 per share AINC has a forward P/E of 2.1X, well below the industry average of 10.8X.

AINC trades at a significant discount to its historic high of 184.7X and the median of 5.5X. Even better and more recently, AINC has traded nicely below its high over the last year of 8.4X and the median of 5.2X.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

AINC stock could be poised to go higher considering its earnings potential and low valuation. Rising earnings estimate revisions is also a good sign and could be a catalyst for the stock. At its current levels, the Average Zacks Price Target suggests 69% upside.

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