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On Friday, CFRA analyst Kenneth Leon upgraded American Homes 4 Rent (NYSE:AMH) stock rating from Sell to Hold, maintaining a price target of $35.00. The adjustment was made based on the forward price to funds from operations (P/FFO) multiple, which is currently at 18.8 times, aligning closely with the industry average of 18.5 times for single-family residential real estate investment trusts (REITs). According to InvestingPro data, the company, currently valued at $14.71 billion, is trading near its Fair Value with a P/E ratio of 37.17x. InvestingPro analysis reveals the stock has maintained dividend payments for 13 consecutive years, with impressive dividend growth of 36.36% in the last twelve months.
Leon noted a slight revision to the company’s funds from operations (FFO) forecast for 2025, reducing it by $0.01 to $1.86, and initiated a 2026 FFO estimate of $1.95. Revenue projections for the company stand at $1.85 billion for 2025 and $1.94 billion for 2026. American Homes 4 Rent reported a fourth-quarter FFO of $0.45 per share, which was consistent with the consensus estimates. The company has demonstrated stable growth with a revenue increase of 6.57% in the last twelve months and maintains a defensive beta of 0.79, indicating lower volatility compared to the broader market.
The company has provided guidance for 2025, expecting revenue growth between 2.5% and 4.5%, which is lower than the growth rate in 2024. Operating expenses are anticipated to increase by 3.0% to 5.0%, leading to an estimated core net operating income (NOI) growth of 2.25% to 4.25%. In the fourth quarter, the company saw a 7.6% increase in rental revenue, while operating expenses went up by 5.9%, resulting in an 8.5% rise in core NOI. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.74, indicating robust liquidity. For deeper insights into AMH’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Rental rates in the top 20 markets experienced a year-over-year increase of 3.3%, reaching an average of $2,227 per month. The most significant rental rate hikes were observed in the Chicago area at 7.0%, Savannah/Hilton Head at 6.5%, and Indianapolis at 6.4%. Occupancy levels in the fourth quarter were reported at 95.4%, which is a 70 basis point decrease from the previous year.
At the end of the quarter, American Homes 4 Rent’s total property count stood at 61,000 homes. Throughout 2024, the company added 3,724 homes and sold 587 properties. Additionally, the company reaffirmed its commitment to deliver between $700 million and $800 million in owned development and to invest $100 million to $150 million in its wholly-owned land and development pipeline.
In other recent news, American Homes 4 Rent has seen several significant developments. Morgan Stanley (NYSE:MS) has upgraded the company’s stock rating from Equalweight to Overweight, reflecting confidence in its potential for earnings growth. The firm’s analyst, Adam Kramer, projects earnings growth of 4% in 2025 and 8% in both 2026 and 2027, which positions the company favorably within the real estate investment trust sector. Additionally, American Homes 4 Rent has appointed Bryan Smith as its new Chief Executive Officer, effective January 1, 2025, succeeding David P. Singelyn. The company’s Board of Trustees has also expanded from twelve to thirteen members, with Smith joining as a trustee.
Furthermore, American Homes 4 Rent has issued $500 million in senior unsecured notes, with a 5.250% interest rate due in 2035. These notes were priced at 99.484% of their par value and are part of the company’s capital management strategy. The issuance was conducted under an automatic shelf registration statement filed with the Securities and Exchange Commission. This financial move aims to secure long-term financing and support the company’s growth strategy. These recent developments underscore American Homes 4 Rent’s ongoing efforts to strengthen its market position and financial stability.
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