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Elme Communities (ELME)
NYSE:ELME
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Elme Communities
(NYSE:ELME)
61Neutral
Positive Factors
Market Strength
The Washington DC metro area, which makes up the bulk of ELME's portfolio, has remained one of the most durable markets in the sector.
Strategic Review
The announcement of a strategic review could be a long-term positive for shareholders.
Negative Factors
Management Pressure
The announcement could increase pressure on management to pursue a sale, potentially closing off other strategic avenues.
Underperformance
Atlanta has been underperforming due to elevated bad debt and supply that has been putting pressure on same store revenue growth.
Elme Communities (ELME) vs. S&P 500 (SPY)
Market Cap
$1.51B
Dividend Yield4.13%
Average Volume (3M)750.23K
Price to Earnings (P/E)―
Beta (1Y)0.70
Revenue Growth6.15%
EPS Growth74.89%
CountryUS
Employees255
SectorReal Estate
Sector Strength76
IndustryREITs
Share Statistics
EPS (TTM)-0.15
Shares Outstanding88,029,290
10 Day Avg. Volume636,075
30 Day Avg. Volume750,226
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)6.35
Price to Cash Flow (P/CF)15.70
P/FCF Ratio15.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.00Price Target Upside10.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Elme Communities Business Overview & Revenue Model
Company DescriptionWashington Real Estate Investment Trust engages in the ownership and operation of income-producing real estate properties. It operates through the following segments: Office and Multifamily. The Office segment provides office space for various types of businesses and professions. The Multifamily segment provides rental housing for individuals and families throughout Washington metro region. The company was founded by Arthur A. Birney and Benjamin H. Dorsey in 1960 and is headquartered in Washington, DC.
How the Company Makes MoneyElme Communities generates revenue primarily through the leasing of its residential properties. The company's key revenue streams include rental income from tenants residing in its apartment units and fees associated with property management services. ELME's earnings are significantly influenced by occupancy rates, rental price adjustments, and property appreciation. Additionally, the company may engage in strategic partnerships or joint ventures to enhance its property portfolio and maximize returns. Income from property sales or refinancing activities also contributes to ELME's overall financial performance.
Elme Communities Financial Statement Overview
Summary
Elme Communities is facing financial challenges, particularly with declining revenues and persistent net losses. The income statement score is low due to the revenue drop and negative net income. The balance sheet score is moderate, with rising leverage but reasonable equity financing. The cash flow score indicates resilience with positive operating cash flow despite declining net income. Overall, financial management shows strengths in cash conversion but needs strategic focus on revenue growth.Income Statement
Elme Communities has faced significant challenges on its income statement. The company has seen declining revenues over the years, with a notable drop from $294M in 2020 to $0 in 2024. The net income has consistently been negative, indicating ongoing profitability issues. Although there were some improvements in EBIT and EBITDA margins from 2023 to 2024, the overall trajectory shows a need for revenue stabilization and growth.40
Negative
Balance Sheet
The balance sheet presents a mixed picture for Elme Communities. The debt-to-equity ratio has increased over the years, indicating rising leverage, which could be a risk if not managed properly. However, the company has maintained a relatively stable stockholders' equity, although it has slightly decreased over the years. The equity ratio remains healthy, suggesting reasonable asset financing through equity.55
Neutral
Cash Flow
Elme Communities' cash flow statement shows some resilience. Despite declining net income, operating cash flow has remained positive, indicating decent cash conversion. Free cash flow also showed a notable increase from 2022 to 2023. However, the sustainability of this trend is uncertain given the declining revenue base.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 241.94M | 227.91M | 209.38M | 169.15M | 294.12M | Gross Profit |
| 144.37M | 139.97M | 127.94M | 102.24M | 181.21M | EBIT |
| 23.47M | -23.06M | -1.01M | -484.00K | 37.23M | EBITDA |
| 120.67M | 66.40M | 90.00M | 76.48M | 117.02M | Net Income Common Stockholders |
| -13.10M | -52.98M | -60.73M | -21.79M | -52.98M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 6.14M | 7.22M | 8.39M | 233.60M | 7.70M | Total Assets |
| 1.85B | 1.90B | 1.87B | 1.88B | 2.41B | Total Debt |
| 698.95M | 679.35M | 552.36M | 496.95M | 987.37M | Net Debt |
| 692.81M | 673.36M | 543.97M | 263.35M | 979.67M | Total Liabilities |
| 763.68M | 745.68M | 608.82M | 558.93M | 1.09B | Stockholders Equity |
| 1.08B | 1.15B | 1.26B | 1.32B | 1.32B |
| Cash Flow | Free Cash Flow | |||
| 95.24M | 84.67M | 34.26M | 56.70M | 54.67M | Operating Cash Flow |
| 95.24M | 84.67M | 73.21M | 89.16M | 112.99M | Investing Cash Flow |
| -43.74M | -146.22M | -241.16M | 702.17M | 65.76M | Financing Cash Flow |
| -51.43M | 60.24M | -56.42M | -565.40M | -185.20M |
Elme Communities Technical Analysis
Positive
17.18
Price Trends
15.96
Positive
16.09
Positive
16.20
Positive
Market Momentum
0.31
Positive
57.34
Neutral
68.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ELME, the sentiment is Positive. The current price of 17.18 is equal to the 20-day moving average (MA) of 17.18, above the 50-day MA of 15.96, and above the 200-day MA of 16.20, indicating a neutral trend. The MACD of 0.31 indicates Positive momentum. The RSI at 57.34 is Neutral, neither overbought nor oversold. The STOCH value of 68.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ELME.
Elme Communities Risk Analysis
Elme Communities disclosed 40 risk factors in its most recent earnings report. Elme Communities 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
Elme Communities Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $29.91B | 27.88 | 9.10% | 3.21% | 4.85% | 16.04% | |
71 Outperform | $19.90B | 26.02 | 13.53% | 3.26% | 6.29% | 82.88% | |
69 Neutral | $27.20B | 25.78 | 9.36% | 3.85% | 3.80% | 24.08% | |
69 Neutral | $12.77B | 79.99 | 3.38% | 3.43% | 0.55% | -59.48% | |
61 Neutral | $1.51B | ― | -1.17% | 4.13% | 6.15% | 74.89% | |
61 Neutral | $19.59B | 36.41 | 8.73% | 3.60% | 1.98% | -4.78% | |
61 Neutral | $4.81B | 18.83 | -3.83% | 10.85% | 6.22% | -19.61% |
* Real Estate Sector Average
Performance Comparison
ELME
Elme Communities
17.18
4.18
32.15%
AVB
AvalonBay
210.25
32.55
18.32%
EQR
Equity Residential
69.51
9.21
15.27%
MAA
Mid-America Apartment
162.32
36.35
28.86%
ESS
Essex Property
298.90
66.79
28.78%
CPT
Camden Property
119.59
24.83
26.20%
Elme Communities Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 10.91% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
Elme Communities demonstrated strong operational and financial performance in 2024, with positive growth initiatives and a strong market position in the Washington Metro area. However, challenges remain with stock trading at a discount, potential impacts from federal government changes, and specific market challenges in Atlanta and Watergate 600. Overall, the positive aspects slightly outweigh the challenges.Highlights
Operational Milestones in 2024
Elme Communities launched their shared Services department, Elme Resident Services, streamlining resident account management and improving operational efficiency. They also initiated Phase 1 of the managed Wi-Fi initiative, with NOI growth expected to ramp up throughout 2025.
Strong Demand and Market Positioning
The Washington Metro area was a top-performing market in 2024, with demand trends remaining solid. The region's diverse economy and high cost of housing drive sustained demand for value-oriented rental options.
Renovation and Revenue Growth Initiatives
Elme completed about 500 full renovations in 2024 with an average renovation ROI of approximately 17%. They captured approximately $1.8 million of additional NOI growth from operating initiatives and expect further growth in 2025.
Positive Market Dynamics Expected in 2025
The Washington Metro portfolio is expected to experience continued strong supply-demand dynamics, and Atlanta's market dynamics are expected to gradually improve, paving the way for a strong 2026.
Strong Balance Sheet and Financial Position
Elme has no debt maturing before 2028, with a solid balance sheet and annualized adjusted net debt to EBITDA of 5.7x in Q4 2024.
Lowlights
Stock Trading at a Discount
Shares of Elme continue to trade at a discount to the company's estimated private market value, prompting a strategic review by the Board of Trustees.
Potential Impact of Federal Government Changes
Despite limited direct exposure, there is uncertainty regarding the impact of the new administration's focus on government efficiency on the Washington Metro area's employment and leasing.
Atlanta Market Challenges
Atlanta experienced high weighted average net inventory ratios in 2024, impacting supply-demand dynamics, though gradual improvement is expected.
Watergate 600 NOI Decline
Watergate 600 NOI is expected to decline by approximately 6% at the midpoint due to anticipated occupancy declines and higher utility expenses.
Company Guidance
During the Elme Communities Fourth Quarter 2024 Earnings Conference Call, the management provided several key metrics and guidance for 2025. They are projecting same-store multifamily revenue growth to range from 2.1% to 3.6%, with embedded revenue growth at 80 basis points by the end of January. The company aims for a same-store occupancy range of 95% to 95.5% for the year, reflecting a more normalized year compared to 2024. Operating expenses are expected to grow between 2.75% and 4.25%, with controllable expenses increasing by 4% to 5% due to technology initiatives. The Watergate 600 NOI is forecasted to decline by approximately 6% to a range of $11.5 million to $12.25 million. Core FFO per share drivers include $0.04 growth from the same-store multifamily portfolio, offset by declines from Watergate 600 and higher G&A expenses. Additionally, Elme plans to complete 500 full renovations in 2025 with an average cost of $17,000 per unit, targeting a 17% ROI, and anticipates capturing $300,000 to $600,000 additional NOI from Phase 1 of their managed Wi-Fi initiative.Elme Communities Corporate Events
Business Operations and StrategyFinancial Disclosures
Elme Communities Shifts Focus Amid Financial Review
Neutral
Feb 13, 2025
Elme Communities reported its financial results for the fourth quarter and full year of 2024, showing a net loss but an increase in core funds from operations. The Board of Trustees has initiated a strategic review to maximize shareholder value, highlighting a shift in strategic focus due to shares trading at a discount. The company maintains a strong balance sheet and has set guidance for 2025, anticipating growth driven by strong demand and favorable dynamics in key regions.
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.