H World Group Limited American Depositary Shares (HTHT)

FairStock Score: 59/100 — STEADY

Key Financials

Strengths

• Generates $6.2 billion in annual free cash flow (38.4% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• High return on equity of 40.5% demonstrating efficient capital deployment
• Attractive 4.0% dividend yield providing steady income returns

Concerns

• Trades significantly above Graham Number ($14) with negative 265% margin of safety—limited downside protection
• High leverage at 2.78x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of 0.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

H World Group Limited American Depositary Shares is a mid-cap consumer cyclical company valued at $16.0 billion. The business generates $25.3 billion in annual revenue with a 4.6% net margin and $6.2 billion in free cash flow. From a quality standpoint, H shows solid Piotroski F-Score of 7/9 and distressed Altman Z-Score of 0.4 warrants caution. On valuation, the stock is reasonably priced at 22.2x earnings, with trades far above its Graham Number ($14) with no margin of safety. Growth dynamics show revenue growing at 8.1% and profit growth of 15.4%. The 4.0% dividend yield adds an income component for patient holders. Our composite FairStock Score of 59/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $6.2 billion in annual free cash flow (38.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Elevated leverage at 2.8x D/E means rising interest rates or revenue weakness could strain debt covenants and force asset sales at distressed prices. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer