American Homes 4 Rent shares fell by -1.5% during the day's morning session, and are now trading at a price of $35.56. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
American Homes 4 Rent's Valuation Is in Line With Its Sector Averages:
AMH (NYSE: AMH) is a leading large-scale integrated owner, operator and developer of single-family rental homes. 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, American Homes 4 Rent has a trailing 12 month P/E ratio of 35.2 and a P/B ratio of 1.86.
American Homes 4 Rent's PEG ratio is 9.13, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Exceptional EPS Growth and Growing Revenues:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $1,073 | $1,143 | $1,183 | $1,304 | $1,491 | $1,624 |
| Net Margins | 10% | 14% | 13% | 16% | 21% | 27% |
| Net Income (M) | $112 | $156 | $155 | $211 | $310 | $432 |
| Net Interest Expense (M) | $123 | $127 | $117 | $115 | $135 | $140 |
| Depreciation & Amort. (M) | $319 | $329 | $343 | $373 | $427 | $457 |
| Diluted Shares (M) | 294 | 300 | 307 | 326 | 350 | 362 |
| Earnings Per Share | $0.08 | $0.29 | $0.28 | $0.41 | $0.71 | $1.01 |
| EPS Growth | n/a | 262.5% | -3.45% | 46.43% | 73.17% | 42.25% |
| Avg. Price | $19.52 | $22.96 | $25.95 | $36.05 | $37.34 | $35.56 |
| P/E Ratio | 244.0 | 79.17 | 92.68 | 85.83 | 51.86 | 35.21 |
| Free Cash Flow (M) | $359 | $436 | $457 | $548 | $567 | $699 |
| CAPEX (M) | $52 | $22 | $17 | $48 | $98 | $40 |
| Total Debt (M) | $2,804 | $2,833 | $2,817 | $3,880 | $4,516 | $4,462 |
American Homes 4 Rent has exceptional EPS growth, generally positive cash flows, and growing revenues and a flat capital expenditure trend.
