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AvalonBay (AVB)
NYSE:AVB
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AvalonBay
(NYSE:AVB)79Outperform
Positive Factors
Development Pipeline
AvalonBay trades at a premium to peers, justified by stronger growth compared to its peers and a robust development pipeline.
Growth Potential
AvalonBay Communities is expected to deliver sector-leading growth due to a compelling macro backdrop for the multifamily sector.
Negative Factors
Operational Challenges
AVB had a lackluster 4Q24, missing on Core FFOps due to lower-than-expected blended lease growth of +1.1% and higher SS expenses.
AvalonBay (AVB) vs. S&P 500 (SPY)
Market Cap
$31.72B
Dividend Yield3.03%
Average Volume (3M)663.17K
Price to Earnings (P/E)29.4
Beta (1Y)0.78
Revenue Growth4.85%
EPS Growth16.04%
CountryUS
Employees3,039
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)7.59
Shares Outstanding142,254,780
10 Day Avg. Volume637,128
30 Day Avg. Volume663,172
Financial Highlights & Ratios
PEG Ratio1.83
Price to Book (P/B)N/A
Price to Sales (P/S)10.89
Price to Cash Flow (P/CF)24.10
P/FCF Ratio20.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$240.57Price Target Upside10.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
AvalonBay Business Overview & Revenue Model
Company DescriptionAvalonBay Communities, Inc. (AVB) is a real estate investment trust (REIT) that develops, redevelops, acquires, and manages apartment communities in high-demand markets across the United States. The company primarily operates in the multifamily housing sector, focusing on metropolitan areas with strong economic growth and high barriers to entry. AvalonBay offers a range of apartment homes, catering to both luxury and affordable housing segments, aiming to provide quality living experiences for its residents.
How the Company Makes MoneyAvalonBay generates revenue primarily through the rental income of its apartment communities. As a REIT, AvalonBay acquires and manages a diverse portfolio of residential properties, collecting rent from tenants who lease these units. The company also engages in development and redevelopment projects to expand and enhance its property portfolio, potentially increasing rental income over time. Additionally, AvalonBay may earn revenue from property management services, ancillary fees, and partnerships with other real estate developers. The company's success in generating income is closely tied to its ability to maintain high occupancy rates, strategically invest in desirable locations, and manage properties efficiently.
AvalonBay Financial Statement Overview
Summary
AvalonBay presents a strong financial profile with consistent revenue growth, robust profitability, and a solid balance sheet devoid of debt. The company’s cash flow generation is healthy, though potential fluctuations in financing activities should be monitored. The financial stability and growth trajectory position AvalonBay favorably within the REITs industry.Income Statement
AvalonBay demonstrates strong revenue growth with a consistent upward trend in both total revenue and net income over the years. The EBIT margin has improved significantly, indicating efficient operational management. However, the absence of EBITDA data for the latest year prevents a full margin analysis. Overall, profitability is robust, with net profit margins showing a positive trajectory.85
Very Positive
Balance Sheet
The balance sheet reflects a strong equity position with no total debt reported in the latest year, enhancing financial stability. The equity ratio remains solid, indicating sound financial leverage. The company's return on equity (ROE) is strong, driven by substantial net income, showcasing effective utilization of shareholder funds.90
Very Positive
Cash Flow
AvalonBay maintains a healthy cash flow with consistent free cash flow growth. The operating cash flow to net income ratio is robust, indicating cash generation efficiency. The absence of capital expenditures further strengthens free cash flow. However, potential fluctuations in financing activities could impact future cash flow stability.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.91B | 2.78B | 2.59B | 2.29B | 2.30B | Gross Profit |
| 2.91B | 1.79B | 1.67B | 1.44B | 1.48B | EBIT |
| 2.17B | 1.72B | 822.12M | 651.29M | 716.91M | EBITDA |
| 2.16B | 1.96B | 1.64B | 1.41B | 1.42B | Net Income Common Stockholders |
| 1.08B | 928.83M | 1.14B | 1.00B | 827.63M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 108.58M | 397.89M | 613.19M | 420.25M | 216.98M | Total Assets |
| 21.00B | 20.68B | 20.46B | 19.90B | 19.20B | Total Debt |
| 8.25B | 8.14B | 8.32B | 8.10B | 7.56B | Net Debt |
| 8.14B | 7.74B | 7.70B | 7.68B | 7.35B | Total Liabilities |
| 9.06B | 8.89B | 9.20B | 8.97B | 8.44B | Stockholders Equity |
| 11.94B | 11.78B | 11.25B | 10.93B | 10.75B |
| Cash Flow | Free Cash Flow | |||
| 1.61B | 1.36B | 1.25B | 1.05B | 1.08B | Operating Cash Flow |
| 1.61B | 1.56B | 1.42B | 1.20B | 1.22B | Investing Cash Flow |
| -996.86M | -928.96M | -560.42M | -624.05M | -179.43M | Financing Cash Flow |
| -874.90M | -834.36M | -671.06M | -348.86M | -854.26M |
AvalonBay Technical Analysis
Negative
218.50
Price Trends
219.10
Negative
222.23
Negative
215.00
Positive
Market Momentum
1.06
Negative
45.74
Neutral
38.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVB, the sentiment is Negative. The current price of 218.5 is below the 20-day moving average (MA) of 220.98, below the 50-day MA of 219.10, and above the 200-day MA of 215.00, indicating a neutral trend. The MACD of 1.06 indicates Negative momentum. The RSI at 45.74 is Neutral, neither overbought nor oversold. The STOCH value of 38.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AVB.
AvalonBay Risk Analysis
AvalonBay disclosed 31 risk factors in its most recent earnings report. AvalonBay reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AvalonBay Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $31.72B | 29.36 | 9.10% | 3.03% | 4.85% | 16.04% | |
78 Outperform | $28.82B | 27.11 | 9.36% | 3.66% | 3.80% | 24.08% | |
71 Outperform | $20.52B | 26.71 | 13.53% | 3.18% | 6.29% | 82.88% | |
71 Outperform | $15.03B | 176.82 | 2.41% | 3.75% | 2.72% | -80.72% | |
69 Neutral | $13.16B | 82.06 | 3.38% | 3.31% | 0.55% | -59.48% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
61 Neutral | $20.40B | 37.91 | 8.73% | 3.48% | 1.98% | -4.78% |
* Real Estate Sector Average
Performance Comparison
AVB
AvalonBay
218.50
37.63
20.80%
EQR
Equity Residential
71.91
10.91
17.89%
MAA
Mid-America Apartment
166.77
37.33
28.84%
ESS
Essex Property
301.44
64.76
27.36%
UDR
UDR
44.22
7.68
21.02%
CPT
Camden Property
121.82
24.35
24.98%
AvalonBay Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -2.58% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook for AvalonBay Communities, with significant progress in revenue growth, capital allocation, and strategic portfolio optimization. However, challenges remain in the form of expense growth and regulatory risks in certain markets.Highlights
Revenue and Core FFO Growth
AvalonBay Communities delivered a revenue growth of 3.4% and core FFO growth of 3.6% for Q4 2024.
Increased Development Starts and Capital Sourcing
Development starts increased by $200 million to $1.1 billion. The company sourced $2 billion of new capital at an attractive 5.1% initial cost.
Operating Model Transformation Success
The operating model transformation generated $39 million of NOI, exceeding the plan by $2 million, with expectations to generate an additional $9 million in 2025.
Strategic Portfolio Optimization
The suburban portfolio increased to 73% from 70%, with a goal of reaching 80%. Expansion market presence increased to 10% from 8%, aiming for 25%.
Strong Balance Sheet for Future Growth
The balance sheet is robust, allowing AvalonBay to leverage strategic capabilities for further growth in 2025 and beyond.
Lowlights
Challenges in Expansion Markets
Expansion regions are projected to deliver sub-2% growth due to heavy levels of unleased inventory and new deliveries.
Operating Expense Growth
Same-store operating expense growth is expected to be 4.1% in 2025, higher in the first half due to various factors.
Regulatory Risk in Certain Markets
Increased regulatory risk in certain markets, such as Montgomery County, affects portfolio strategy.
Company Guidance
During AvalonBay Communities' Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025, highlighting several key metrics and strategic focus areas. The company expects core FFO per share growth of 3.5%, driven by a 3% increase in same-store residential revenue, 4.1% operating expense growth, and 2.4% NOI growth. AvalonBay plans to start $1.6 billion in new developments and projected $30 million in residential NOI from development communities in 2025. Their capital plan includes $2.1 billion in capital uses, with $960 million anticipated from unsecured debt issuance and $890 million from forward equity contracts. AvalonBay is also focusing on optimizing its portfolio by increasing exposure to suburban coastal and select Sunbelt markets. The company aims to generate $9 million in additional revenue and operating efficiencies, moving toward a $80 million annual incremental NOI goal in the coming years.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.