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AvalonBay (AVB)
NYSE:AVB
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AvalonBay
(NYSE:AVB)
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Rating:73Outperform
Price Target:
$215.00
â–²(12.23% Upside)
AvalonBay's overall stock score is driven by strong financial performance and strategic growth initiatives, despite challenges in cash flow and certain regional markets. The technical indicators suggest potential short-term weakness, and the valuation is slightly high, but the dividend yield offers a compensating factor.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong demand for AvalonBay's properties and effective management, supporting long-term financial health.
Development Projects
Significant investment in development projects positions AvalonBay for future growth, enhancing its market position and revenue potential.
Balance Sheet Strength
A strong balance sheet with prudent leverage provides AvalonBay with financial flexibility to invest in growth opportunities and withstand economic fluctuations.
Negative Factors
Free Cash Flow Decline
A decline in free cash flow growth can limit AvalonBay's ability to fund new projects and return capital to shareholders, impacting long-term financial flexibility.
Development Delays
Development delays can lead to lower-than-expected revenue and NOI, affecting AvalonBay's growth projections and operational efficiency.
Regional Market Challenges
Challenges in key regions like the Sunbelt can impact AvalonBay's pricing power and occupancy rates, potentially affecting overall profitability.
AvalonBay (AVB) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$27.45B
Dividend Yield3.58%
Average Volume (3M)865.12K
Price to Earnings (P/E)23.9
Beta (1Y)0.73
Revenue Growth6.44%
EPS Growth37.67%
CountryUS
Employees2,928
SectorReal Estate
Sector Strength53
IndustryREIT - Residential
Share Statistics
EPS (TTM)1.88
Shares Outstanding142,383,030
10 Day Avg. Volume930,842
30 Day Avg. Volume865,123
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.38
Enterprise Value/Revenue12.72
Enterprise Value/Gross Profit20.19
Enterprise Value/Ebitda16.65
Forecast
1Y Price Target
$217.38Price Target Upside13.47% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
AvalonBay Business Overview & Revenue Model
Company DescriptionAs of December 31, 2020, the Company owned or held a direct or indirect ownership interest in 291 apartment communities containing 86,025 apartment homes in 11 states and the District of Columbia, of which 18 communities were under development and one community was under redevelopment. The Company is an equity REIT in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California, as well as in the Company's expansion markets consisting of Southeast Florida and Denver, Colorado (the Expansion Markets).
How the Company Makes MoneyAvalonBay generates revenue primarily through rental income from its multifamily residential properties. The company earns money by leasing apartment units to tenants, which provides a steady stream of cash flow. Additionally, AvalonBay benefits from property management fees charged to its owned and operated properties. The company also engages in property development and redevelopment activities, which can lead to increased rental income once new or renovated units are leased. Key revenue streams include monthly rents, ancillary income from services such as parking and pet fees, and the potential appreciation of property values over time. Significant partnerships with local governments and community organizations may also enhance AvalonBay's ability to develop and manage properties effectively, contributing to its overall earnings.
AvalonBay Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The call reflects a mixed sentiment with strong financial performance and strategic growth initiatives being offset by challenges in development timelines and regional market conditions. While the company has managed to exceed initial financial guidance and maintain strong occupancy in established regions, it faces notable challenges in certain markets and operational areas, particularly in dealing with increased bad debt and supply issues.Q2-2025 Updates
Positive Updates
Exceeding Initial Guidance
The second quarter and first half of 2025 results exceeded initial guidance due to better-than-expected revenue growth and tight management of operating expenses. Operating expense growth is now forecasted at 3.1%, 100 basis points better than original guidance.
Development and Investment Success
AvalonBay's $3 billion development projects are expected to generate differentiated external growth, with development underway trending above pro forma stabilized yields. The company is on track to start $1.7 billion in new development projects for the full year, up from $1.6 billion.
Strong Balance Sheet
Raised $1.3 billion of capital year-to-date at an initial cost of 5.0%, with yields over 6% on new development projects, indicating an attractive cost of capital.
Occupancy and Revenue Growth
Core FFO growth of 3.3% year-to-date, positioning AvalonBay towards the top of the sector. Total market occupancy at 94.8% in established regions, with significant growth expected in Seattle and New York regions due to healthy demand and moderating supply.
Negative Updates
Delayed Development Occupancies
Some timing delays in occupancies were experienced in the first half of the year, particularly in Denver, resulting in lower NOI from new development than initially expected.
Challenges with Bad Debt
There is a slower-than-expected improvement in bad debt mainly in the Mid-Atlantic and New York regions, attributed to regulatory actions and overloaded court systems.
Sunbelt Market Struggles
Sunbelt region occupancy stands at 89.5% due to elevated levels of standing inventory from recent deliveries, impacting pricing power.
Moderate Job Growth Impact
Weaker-than-expected job growth, particularly affecting the Mid-Atlantic and Southern California regions, has led to softer demand and pricing power compared to initial forecasts.
Company Guidance
During AvalonBay Communities' Second Quarter 2025 Earnings Conference Call, the company provided updated guidance for the year. The second quarter and first half results exceeded initial guidance, primarily driven by better-than-expected revenue growth due to higher occupancy and rental revenue. Operating expenses were tightly managed, resulting in same-store NOI outperformance. The company revised its operating expense growth forecast to 3.1%, a 100 basis point improvement, leading to a projected NOI growth of 2.7% for 2025. Core FFO per share guidance is maintained at $11.39, reflecting a 3.5% year-over-year growth expectation. The company also increased its development starts target to $1.7 billion for the year, citing lower new supply levels and strategic capability in high-quality projects. AvalonBay's balance sheet remains robust with $1.3 billion of capital raised at a 5.0% cost. The company's $3 billion in development projects are expected to generate significant external growth, with 3,000 additional homes anticipated for occupancy by 2026, contributing to core FFO growth above same-store NOI growth.AvalonBay Financial Statement Overview
Summary
AvalonBay demonstrates strong financial health with consistent revenue growth and robust profitability margins. The balance sheet is solid, with a good balance of debt and equity. However, the decline in free cash flow growth is a potential area of concern that could impact future financial flexibility.Income Statement
AvalonBay's income statement shows a strong performance with a consistent increase in revenue, evidenced by a 15.9% growth in the TTM period. The company maintains healthy margins, including a gross profit margin of 63.13% and a net profit margin of 38.86% for the TTM. The EBIT and EBITDA margins are also robust at 46.74% and 75.67%, respectively, indicating efficient operational management. However, the slight decline in gross profit margin over the years suggests potential cost pressures.85
Very Positive
Balance Sheet
The balance sheet reflects a stable financial position with a manageable debt-to-equity ratio of 0.74 in the TTM, indicating prudent leverage. The return on equity is solid at 9.60%, showing effective use of equity to generate profits. The equity ratio stands at 54.71%, suggesting a strong equity base relative to total assets. However, the gradual increase in total debt over the years could pose a risk if not managed carefully.78
Positive
Cash Flow
AvalonBay's cash flow statement reveals a mixed picture. While the operating cash flow to net income ratio is healthy at 1.12, indicating good cash generation relative to net income, the free cash flow growth rate has declined by 114.9% in the TTM. The free cash flow to net income ratio remains strong at 87.09%, but the negative growth in free cash flow is a concern that needs addressing.72
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.98B | 2.91B | 2.77B | 2.59B | 2.29B | 2.30B |
| Gross Profit | 1.88B | 1.84B | 1.78B | 1.67B | 1.44B | 1.48B |
| EBITDA | 2.28B | 2.16B | 1.96B | 2.20B | 1.99B | 1.75B |
| Net Income | 1.16B | 1.08B | 928.83M | 1.14B | 1.00B | 827.63M |
Balance Sheet | ||||||
| Total Assets | 21.84B | 21.00B | 20.68B | 20.46B | 19.90B | 19.20B |
| Cash, Cash Equivalents and Short-Term Investments | 102.83M | 108.58M | 397.89M | 613.19M | 420.25M | 216.98M |
| Total Debt | 8.83B | 8.25B | 8.14B | 8.48B | 8.27B | 7.75B |
| Total Liabilities | 9.67B | 9.06B | 8.89B | 9.20B | 8.97B | 8.44B |
| Stockholders Equity | 11.95B | 11.94B | 11.78B | 11.25B | 10.93B | 10.75B |
Cash Flow | ||||||
| Free Cash Flow | 1.39B | 1.41B | 1.36B | 1.25B | 1.05B | 1.08B |
| Operating Cash Flow | 1.61B | 1.61B | 1.56B | 1.42B | 1.20B | 1.22B |
| Investing Cash Flow | -1.36B | -996.86M | -928.96M | -560.42M | -624.05M | -179.43M |
| Financing Cash Flow | -722.41M | -874.90M | -834.36M | -671.06M | -348.86M | -854.26M |
AvalonBay Technical Analysis
Negative
191.57
Price Trends
193.43
Negative
198.43
Negative
205.02
Negative
Market Momentum
0.06
Positive
48.72
Neutral
25.92
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 191.57 is below the 20-day moving average (MA) of 193.58, below the 50-day MA of 193.43, and below the 200-day MA of 205.02, indicating a bearish trend. The MACD of 0.06 indicates Positive momentum. The RSI at 48.72 is Neutral, neither overbought nor oversold. The STOCH value of 25.92 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 41 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | 16.85B | 28.93 | 9.67% | 4.34% | 1.19% | 10.52% | |
73 Outperform | $27.45B | 23.91 | 9.77% | 3.58% | 6.44% | 37.67% | |
69 Neutral | 17.64B | 21.27 | 14.20% | 3.81% | 7.56% | 54.15% | |
69 Neutral | 17.91B | 65.11 | 5.64% | 4.01% | 4.41% | -0.16% | |
68 Neutral | 24.88B | 24.93 | 9.19% | 4.32% | 4.49% | 5.87% | |
67 Neutral | 15.17B | 74.81 | 3.40% | 3.92% | 0.76% | -60.70% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% |
* Real Estate Sector Average
Performance Comparison
AVB
AvalonBay
191.57
-26.53
-12.16%
EQR
Equity Residential
63.74
-7.33
-10.31%
MAA
Mid-America Apartment
138.74
-12.94
-8.53%
ESS
Essex Property
263.66
-20.96
-7.36%
CPT
Camden Property
106.05
-13.41
-11.23%
INVH
Invitation Homes
28.90
-4.86
-14.40%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.