If you have been watching Meituan’s stock and wondering whether now is the time to act, you are definitely not alone. In a world where consumer tech stocks seem to swing wildly day after day, Meituan stands out for both its volatility and its intriguing story. Over the last year, the company’s share price has seen a steady decline, dropping 22.0% over twelve months and 33.4% year to date. The longer-term picture is even more dramatic, with shares down nearly 59% over five years.
If you have been tracking shorter windows, you might also spot subtle signs of stabilization, or even the first hints of a turnaround. Last week, Meituan posted a modest gain of 0.7%, with recent sentiment seemingly buoyed by an uptick in consumer spending and the Chinese government’s ongoing support for domestic technology companies. Meanwhile, headwinds like uncertain regulatory environments and competition continue to keep the risk dial turned up. That mix is exactly what makes the valuation conversation so lively right now.
Looking at standard valuation indicators, Meituan has earned a value score of 3 out of 6. This means it appears undervalued in half of the key categories that analysts often reference. However, numbers never tell the whole story. In the next section, let’s break down what goes into that score by examining how different valuation methods reveal Meituan’s hidden strengths and challenges, and then explore a final, potentially smarter way to assess what this stock could really be worth.
The Discounted Cash Flow (DCF) model estimates the value of a business by projecting its future free cash flows and then discounting those amounts back to today’s value. By doing this, investors can try to figure out what a stock is truly worth, rather than just relying on market sentiment or recent price moves.
For Meituan, analysts report that the latest twelve-month Free Cash Flow sits at approximately CN¥36.7 billion. Looking further ahead, projections suggest this number could reach CN¥113.8 billion in ten years’ time. While analyst estimates typically extend only about five years, Simply Wall St carries the forecast out to a full decade using their own methodology. This highlights both optimism around Meituan’s growth and the uncertainties that come with long-range forecasting.
Based on the DCF model’s calculations, Meituan’s intrinsic value per share is estimated to be HK$229.59. Given the current share price, this implies the stock may be trading at a discount of 56.3 percent. In this context, Meituan appears significantly undervalued compared to its underlying business potential.
Our Discounted Cash Flow (DCF) analysis suggests Meituan is undervalued by 56.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
The Price-to-Earnings (PE) ratio is often considered the most suitable valuation metric for profitable companies like Meituan because it directly relates share price to earnings. This makes it a useful yardstick for comparing how much investors are paying for each unit of profit generated by the business.
What constitutes a “normal” or “fair” PE ratio can vary widely, depending not just on industry trends but also on growth expectations and risks. Higher growth prospects generally justify higher PE ratios, whereas increased risks or market uncertainty usually pull them lower.
Currently, Meituan trades at a PE ratio of 19.0x. This is slightly above both the industry average of 16.7x for Hospitality companies and the peer average of 17.2x. But simple comparisons only tell part of the story. Simply Wall St’s Fair Ratio metric takes a more holistic approach, estimating what an appropriate PE ratio should be after considering Meituan’s earnings growth potential, profit margins, industry dynamics, scale, and risk factors. For Meituan, the Fair Ratio is calculated at 35.8x, a figure that suggests the market is not fully pricing in the company’s strengths and prospects.
The benefit of using the Fair Ratio is that it blends analyst outlook, business quality, and sector realities into a single, dynamic benchmark, rather than relying just on point-in-time industry averages. By this metric, Meituan appears to be undervalued on a relative earnings basis, given the gap between its actual PE of 19.0x and the fair benchmark of 35.8x.
Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple, powerful story that ties together your view on a company’s prospects, such as projected revenue, earnings growth, and margins, along with your own assumptions about what the business is worth. Narratives translate these perspectives into a fair value and show how your outlook compares with the current market price.
On Simply Wall St, Narratives are a widely used tool (available on the Community page), making it easy for anyone to forecast, share their thinking, and see how new developments could impact valuation. This can all be done without needing to build your own model. Narratives help you decide when to buy or sell by clearly displaying your calculated fair value versus today’s price, and they update automatically when fresh news or quarterly results are released.
For example, right now the highest Narrative on Meituan projects a fair value of HK$300.96, while the lowest estimates just HK$78.28. This shows how investors with different expectations and assumptions can arrive at very different conclusions about what Meituan is truly worth.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 3690.HK.
