AvalonBay Communities, Inc.
AvalonBay Communities, Inc. Fundamental Analysis
AvalonBay Communities, Inc. (AVB) shows moderate financial fundamentals with a PE ratio of 23.59, profit margin of 34.64%, and ROE of 8.84%. The company generates $3.1B in annual revenue with moderate year-over-year growth of 5.27%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 57.5/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze AVB's fundamental strength across five key dimensions:
Efficiency Score
WeakAVB struggles to generate sufficient returns from assets.
Valuation Score
ExcellentAVB trades at attractive valuation levels.
Growth Score
ExcellentAVB delivers strong and consistent growth momentum.
Financial Health Score
ModerateAVB shows balanced financial health with some risks.
Profitability Score
ModerateAVB maintains healthy but balanced margins.
Key Financial Metrics
Is AVB Expensive or Cheap?
P/E Ratio
AVB trades at 23.59 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, AVB's PEG of -2.39 indicates potential undervaluation.
Price to Book
The market values AvalonBay Communities, Inc. at 2.10 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 7.12 times EBITDA. This is generally considered low.
How Well Does AVB Make Money?
Net Profit Margin
For every $100 in sales, AvalonBay Communities, Inc. keeps $34.64 as profit after all expenses.
Operating Margin
Core operations generate 30.07 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $8.84 in profit for every $100 of shareholder equity.
ROA
AvalonBay Communities, Inc. generates $4.74 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
AvalonBay Communities, Inc. generates strong operating cash flow of $1.61B, reflecting robust business health.
Free Cash Flow
AvalonBay Communities, Inc. generates strong free cash flow of $1.55B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $10.95 in free cash annually.
FCF Yield
AVB converts 6.17% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
23.59
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-2.39
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.10
vs 25 benchmark
P/S Ratio
Price to sales ratio
8.21
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.79
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.25
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.09
vs 25 benchmark
ROA
Return on assets percentage
0.05
vs 25 benchmark
ROCE
Return on capital employed
0.04
vs 25 benchmark
How AVB Stacks Against Its Sector Peers
| Metric | AVB Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 23.59 | 24.42 | Neutral |
| ROE | 8.84% | 679.00% | Weak |
| Net Margin | 34.64% | 4578.00% | Weak |
| Debt/Equity | 0.79 | -22.07 (disorted) | Distorted |
| Current Ratio | 0.25 | 14.99 | Weak Liquidity |
| ROA | 4.74% | -1370.00% (disorted) | Weak |
AVB outperforms its industry in 0 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews AvalonBay Communities, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
23.06%
Industry Style: Income, Inflation Hedge, REIT
High GrowthEPS CAGR
35.16%
Industry Style: Income, Inflation Hedge, REIT
High GrowthFCF CAGR
19.43%
Industry Style: Income, Inflation Hedge, REIT
High Growth