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AvalonBay (AVB)
NYSE:AVB
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AvalonBay
(NYSE:AVB)
Rating:76Outperform
Price Target:
$226.00
▲( 13.08% Upside)
Positive Factors
Financial Performance
The company reported a Core FFO number of $2.83 which was two cents higher than consensus and ten cents higher than analyst numbers.
Market Positioning
AvalonBay trades at a premium to peers, justified by stronger growth compared to its peers and a robust development pipeline.
Strategic Expansion
Avalon acquired two properties in Austin, TX, and six communities in Dallas-Fort Worth, which indicates expansion in strategic locations.
Negative Factors
Labor Market Impact
AvalonBay is likely to face higher costs for its developments and weaker demand due to job cuts in its home market.
Operational Costs
Same-store expenses were higher than expected led by delayed tax refunds and utility pressures.
Regional Market Challenges
Denver and Southeast Florida saw negative growth of 3% and 0.8% for the quarter.
AvalonBay (AVB) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$28.45B
Dividend Yield3.4%
Average Volume (3M)868.19K
Price to Earnings (P/E)24.9
Beta (1Y)0.75
Revenue Growth5.61%
EPS Growth19.66%
CountryUS
Employees2,928
SectorReal Estate
Sector Strength62
IndustryREIT - Residential
Share Statistics
EPS (TTM)1.66
Shares Outstanding142,368,180
10 Day Avg. Volume750,820
30 Day Avg. Volume868,189
Financial Highlights & Ratios
PEG Ratio-2.03
Price to Book (P/B)2.48
Price to Sales (P/S)0.00
P/FCF Ratio21.12
Enterprise Value/Market Cap1.34
Enterprise Value/Revenue3.29
Enterprise Value/Gross Profit20.45
Enterprise Value/Ebitda4.64
Forecast
1Y Price Target
$236.00Price Target Upside18.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
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 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 solid financial performance with strong revenue growth and profitability. The income statement shows a robust growth trajectory with a net profit margin of 38.8%. The balance sheet is healthy, featuring a strong equity position and moderate leverage with a debt-to-equity ratio of 0.71. The cash flow statement indicates strong liquidity and effective cash utilization. Overall, the financials are strong with a need for improved operational efficiencies.Income Statement
AvalonBay shows a strong and consistent revenue growth trajectory with a TTM revenue of $2.95B, up from $2.91B in 2024. The gross profit margin remains solid at around 63.2% in TTM, indicating efficient cost management. Net profit margin also improved to 38.8%, showcasing profitability. However, the EBIT margin saw a decrease compared to previous years, reflecting potential operational challenges. Overall, the income statement reflects strong growth and profitability with some room for operational efficiency improvements.85
Very Positive
Balance Sheet
The company maintains a healthy equity base with a debt-to-equity ratio of 0.71, indicating a balanced approach to leverage. The equity ratio stands at 56.2%, reflecting a strong equity position. Return on equity (ROE) is impressive at 9.6% for TTM, demonstrating effective use of shareholders' funds. Although total debt has increased, the company has managed to maintain a solid equity position, indicating financial stability with moderate leverage.78
Positive
Cash Flow
AvalonBay's cash flow analysis reveals a robust operating cash flow to net income ratio of 1.41, indicating strong cash generation capability. The free cash flow growth rate is stable, with minor fluctuations, demonstrating consistent cash management. The free cash flow to net income ratio is 1.22, confirming efficient conversion of income to cash. Overall, the cash flow statement indicates strong liquidity and effective cash utilization, supporting the company's operational and financial stability.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.95B | 2.91B | 2.78B | 2.59B | 2.29B | 2.30B | Gross Profit |
| 1.86B | 1.84B | 1.79B | 1.67B | 1.44B | 1.48B | EBIT |
| 930.54M | 915.75M | 1.72B | 822.12M | 651.29M | 716.91M | EBITDA |
| 2.23B | 2.16B | 1.96B | 1.64B | 1.41B | 1.42B | Net Income Common Stockholders |
| 1.15B | 1.08B | 928.83M | 1.14B | 1.00B | 827.63M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 287.89M | 108.58M | 397.89M | 613.19M | 420.25M | 216.98M | Total Assets |
| 20.64B | 21.00B | 20.68B | 20.46B | 19.90B | 19.20B | Total Debt |
| 8.13B | 8.25B | 8.14B | 8.32B | 8.10B | 7.56B | Net Debt |
| 7.71B | 8.14B | 7.74B | 7.70B | 7.68B | 7.35B | Total Liabilities |
| 8.93B | 9.06B | 8.89B | 9.20B | 8.97B | 8.44B | Stockholders Equity |
| 11.71B | 11.94B | 11.78B | 11.25B | 10.93B | 10.75B |
| Cash Flow | Free Cash Flow | ||||
| 1.40B | 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 |
| -1.16B | -996.86M | -928.96M | -560.42M | -624.05M | -179.43M | Financing Cash Flow |
| -656.41M | -874.90M | -834.36M | -671.06M | -348.86M | -854.26M |
AvalonBay Technical Analysis
Negative
199.86
Price Trends
205.70
Negative
211.25
Negative
215.88
Negative
Market Momentum
-0.59
Positive
41.17
Neutral
39.26
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 199.86 is below the 20-day moving average (MA) of 206.75, below the 50-day MA of 205.70, and below the 200-day MA of 215.88, indicating a bearish trend. The MACD of -0.59 indicates Positive momentum. The RSI at 41.17 is Neutral, neither overbought nor oversold. The STOCH value of 39.26 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $28.45B | 24.89 | 9.67% | 3.40% | 5.61% | 19.66% | |
73 Outperform | $27.85B | 27.74 | 9.01% | 3.94% | 3.91% | 8.78% | |
73 Outperform | $16.82B | 106.24 | 2.47% | 3.48% | 0.56% | -73.40% | |
70 Outperform | $13.91B | 117.52 | 3.40% | 4.06% | 2.35% | -73.89% | |
60 Neutral | $2.75B | 10.29 | 0.33% | 8508.22% | 5.95% | -17.48% | |
60 Neutral | $19.26B | 33.37 | 9.37% | 3.82% | 1.55% | 0.73% | |
60 Neutral | $19.17B | 27.52 | 12.09% | 3.57% | 7.61% | 27.83% |
* Real Estate Sector Average
Performance Comparison
AVB
AvalonBay
199.86
11.98
6.38%
EQR
Equity Residential
68.30
5.34
8.48%
MAA
Mid-America Apartment
154.41
26.68
20.89%
ESS
Essex Property
273.76
24.52
9.84%
UDR
UDR
40.10
2.85
7.65%
CPT
Camden Property
114.40
13.98
13.92%
AvalonBay Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: -4.82%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook for AvalonBay Communities, with strong financial performance, strategic development projects, and diversified portfolio strength. However, there are challenges in specific markets such as Los Angeles and economic uncertainties that may impact future performance. The company remains well-positioned to manage these challenges with its strong balance sheet and operational efficiencies.Q1-2025 Updates
Positive Updates
Strong Core FFO Growth
Achieved a 4.8% growth in core FFO in Q1 compared to last year, exceeding prior guidance by $0.03 due to higher occupancy and favorable operating expenses.
Diversified Portfolio Strength
47% of the portfolio is in established East Coast regions, 41% on the West Coast, and 12% in expansion regions. Achieved a 73% allocation to suburban submarkets.
Successful Development Projects
19 projects under construction with $3 billion in capital costs, match-funded with locked-in construction costs, running slightly under budget due to aggressive subcontractor bidding.
Equity Forward Transaction
Raised $890 million of equity on a forward basis at an average price of $226 per share, to be deployed into accretive development projects.
Improved Rental Affordability
Rental affordability improved in established regions due to solid income growth, with rent-to-income ratios below pre-COVID levels.
Operational Efficiency
Resident turnover at historical lows, supporting higher occupancy. Near-term inventory to lease is trending about 30 basis points below last year.
Positive Regional Performance
Seattle and Northern California performing well, with Northern California occupancy over 96% and asking rents up 5% year-to-date.
Negative Updates
LA Market Challenges
Los Angeles showed modest occupancy gains but weak job growth led to lower-than-expected rent growth, with year-to-date asking rent growth at just 3%.
Economic Uncertainty
Concerns about macroeconomic conditions and job market uncertainty, particularly in the DC Metro area with prospects and residents expressing concerns.
Headwinds from Development Completions
2025 projected as a trough year for new occupancies from the development book, with lower development NOI and external growth compared to 2024.
Company Guidance
During AvalonBay Communities' first quarter 2025 earnings call, the company provided several key metrics and strategic insights. They highlighted a robust development pipeline with $3 billion in projects, aiming to deliver 100 to 150 basis points of spread between development yields and their cost of capital. The company has raised $890 million of equity at $226 per share, intending to fund accretive development. In the first quarter, AvalonBay achieved a 4.8% growth in core FFO, exceeding prior guidance by $0.03, driven by higher occupancy and favorable operating expenses. For the full year, AvalonBay reaffirmed their outlook, expecting sequential growth in the second half. The company also noted their diversified portfolio, with 47% on the East Coast, 41% on the West Coast, and 12% in expansion regions, and they are focused on increasing suburban allocations. The development pipeline's delivery cadence will provide meaningful earnings growth, with 2,300 homes expected for occupancy in 2025 and an increase to 2,800 homes in 2026.AvalonBay Corporate Events
Executive/Board ChangesShareholder Meetings
AvalonBay Re-elects Directors at Annual Meeting
Positive
May 22, 2025
At AvalonBay‘s Annual Meeting of Stockholders on May 21, 2025, eleven directors were re-elected, executive compensation was approved, and Ernst & Young LLP was ratified as the independent auditor for 2025. These decisions reflect the company’s ongoing commitment to stable governance and financial oversight, potentially reinforcing stakeholder confidence in its strategic direction.
The most recent analyst rating on (AVB) stock is a Buy with a $262.00 price target. To see the full list of analyst forecasts on AvalonBay stock, see the AVB Stock Forecast page.
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.