Mid-America Apartment Communities Stock – A Briefing

We've been asking ourselves recently if the market has placed a fair valuation on Mid-America Apartment Communities. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.

Mid-America Apartment Communities's Valuation Is in Line With Its Sector Averages:

MAA, an S&P 500 company, is a real estate investment trust (REIT) focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities primarily in the Southeast, Southwest and Mid-Atlantic regions of the United States. As of June 30, 2023, MAA had ownership interest in 101,986 apartment units, including communities currently in development, across 16 states and the District of Columbia. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 25.55 and an average price to book (P/B) ratio of 2.1. In contrast, Mid-America Apartment Communities has a trailing 12 month P/E ratio of 25.0 and a P/B ratio of 2.39.

When we divide Mid-America Apartment Communities's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -6.68. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

Strong Revenue Growth With Increasing Reinvestment in the Business:

2018 2019 2020 2021 2022 2023
Revenue (MM) $1,571 $1,641 $1,678 $1,778 $2,020 $2,134
Revenue Growth n/a 4.43% 2.25% 5.97% 13.6% 5.66%
Net Margins 15% 22% 15% 30% 32% 27%
Net Income (MM) $231 $354 $255 $534 $637 $586
Net Interest Expense (MM) -$174 $180 $168 $157 $155 $149
Depreciation & Amort. (MM) $122 $497 $511 $533 $543 $562
Earnings Per Share $2.03 $3.07 $2.19 $4.61 $5.48 $5.0
EPS Growth n/a 51.23% -28.66% 110.5% 18.87% -8.76%
Diluted Shares (MM) 114 114 114 115 116 117
Capital Expenditures (MM) $62 $190 $226 $280 $296 $338

Mid-America Apartment Communities has rapidly growing revenues and increasing reinvestment in the business and decent operating margins with a positive growth rate. Additionally, the company's financial statements display a strong EPS growth trend and positive cash flows.

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.