- AHT is a real estate investment trust focused on upper upscale, full-service hotels. The company’s portfolio includes well-known brands like Hilton, Hyatt, Marriott, and Sheraton among others.
- The current share price is equal to $15-$17. In order to justify such a valuation, I believe that investors will have to make optimistic assumptions.
- Using the Gordon Growth Model with a growth rate of 5%, WACC of 7%, and a terminal FCF of $114 million, the terminal value is $4.097 billion.
- In order to obtain an implied share price of $17, I had to use an exit multiple of 34x, which may not be very realistic.
- I used a terminal FCF of $114 million in my FCF projections, which is very optimistic. I cannot really guarantee that the company will be able to come up to the expectations shown in the DCF.
For further details see:
Ashford Hospitality: Why Optimistic FCFs Don't Justify The Valuation