Is the Bullish Sentiment on Invitation Homes (INVH) Justified?

The 18 analysts following Invitation Homes give it an average rating of buy, but the company may be overvalued at current prices. The analysts have set target prices ranging from $30.0 to $40.0 per share, for an average of $34.83. At today's price of $31.75, Invitation Homes is trading -8.86% away from its average target price, suggesting there is an analyst consensus of some upside potential.

Invitation Homes is the nation's leading single-family home leasing company, meeting changing lifestyle demands by providing access to high-quality, renovated homes with valuable features like proximity to jobs and access to good schools. The large-cap Real Estate company is based in Dallas, TX. Invitation Homes has offered a 3.33% dividend yield over the last 12 months.

Invitation Homes has a trailing twelve month P/E ratio of 50.39, compared to an average of 24.81 for the Real Estate sector. Based on its EPS guidance of 0.72, the company has a forward P/E ratio of 44.09.

In contrast, the market is undervaluing Invitation Homes in terms of its equity because its P/B ratio is 1.872. In comparison, the sector average is 2.24. The company's shares are currently trading 183.94% above their Graham number, implying that they are overvalued in terms of earnings and book value.

If analysts are giving the stock a good rating, it's likely that they are looking beyond simple valuation ratios and attempting to forecast the company's growth potential. For example, Invitation Homes has wide margins and growing revenues as you can see in the financial summary below.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $1,765 $1,823 $1,997 $2,238
Revenue Growth n/a 3.29% 9.53% 12.1%
Gross Margins -24.81% 39.53% 56.67% 56.23%
Gross Margins Growth n/a 259.33% 43.36% -0.78%
Operating Margins -30.92% 35.89% 52.3% 51.52%
Operating Margins Growth n/a 216.07% 45.72% -1.49%
Earnings Per Share $0.27 $0.35 $0.43 $0.63
EPS Growth n/a 29.63% 22.86% 46.51%
Diluted Shares (MM) 542 567 601 611
Free Cash Flow (MM) -$146 -$196 -$459 $128
FCF Growth n/a -34.62% -134.35% 127.96%
Capital Expenditures (MM) $808 $893 $1,367 $895
Net Debt / EBITDA 20.04 18.04 12.86 11.13
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.