American Homes 4 Rent 10-K Analysis & Summary – 2/21/2025

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American Homes 4 Rent

10-K

Annual report

Filing date:

02/21/2025

TLDR:

American Homes 4 Rent (AMH) demonstrates solid financial performance and strategic execution, focusing on internal development and efficient property management. Investors should monitor rising property taxes, interest rate volatility, and cybersecurity risks.

ELI5:

American Homes 4 Rent is like a landlord for many single-family homes. They’re doing well by building and managing their properties efficiently, but they need to watch out for things like rising costs and online security.

Accession #:

0001562401-25-000013

Published on

March 16, 2025

Analyst Summary

Rents and other single-family property revenues increased by 6.5% year-over-year.
Average Occupied Days Percentage was 94.2%.
Average Monthly Realized Rent per Property was $2,239.
Core NOI increased to $978.3 million from $904.8 million.
Employee turnover was 25.1%.
Gross Profit Margin: 63.80%
Operating Profit Margin: 27.08%
Net Profit Margin: 27.08%
Return on Assets (ROA): 3.50%
Return on Equity (ROE): 5.57%
Earnings Per Share (EPS): $1.08
Current Ratio: 1.41
Quick Ratio: 0.76
Cash Ratio: 0.67
Debt-to-Equity Ratio: 0.70
Debt-to-Assets Ratio: 0.37
Interest Coverage Ratio: 3.83
Asset Turnover: 0.13
Price-to-Earnings Ratio (P/E): 32.54
Price-to-Book Ratio (P/B): 1.81
Price-to-Sales Ratio (P/S): 7.50
Enterprise Value to EBITDA (EV/EBITDA): 15.87
Revenue Growth: 6.47%
Net Income Growth: 8.33%
EPS Growth: 6.93%
Same-Home Core Revenue Growth: 4.99%
Same-Home Core Property Operating Expense Growth: 4.32%
Same-Home Core NOI Growth: 5.34%

Opportunities and Risks

Concentration Risk: Significant geographic concentration exposes the company to regional economic downturns and natural disasters.
Renovation Costs: Inability to control renovation costs could adversely affect operating results.
Competition: Intense competition for acquisitions and tenants may limit strategic opportunities.
Cybersecurity: Increasing cybersecurity threats could compromise sensitive data and disrupt operations.
Interest Rate Risk: Elevated interest rates could adversely impact the company and its tenants.
HOA Restrictions: HOA rules and restrictions subject the company to increased costs and restrict business operations.
AMH Development Program: Internal development program offers attractive risk-adjusted returns.
Geographic Diversification: Continued expansion into select submarkets of MSAs.
Efficient Property Management: In-house property management enables optimization of rental revenues and expense management.
Brand Recognition: Establishing a nationally recognized brand can attract and retain residents and qualified personnel.
Long-Term Demand: Persistent national housing shortage and demographic trends support long-term demand for single-family rentals.

Potential Implications

American Homes 4 Rent (AMH) 2024 10-K Report Analysis

Executive Summary

This report analyzes American Homes 4 Rent’s (AMH) 2024 10-K filing. AMH continues to execute its strategy of acquiring, developing, and managing single-family rental homes. Key highlights include growth in revenue, expansion of the development program, and continued focus on operational efficiency. However, rising property taxes, interest rate volatility, and cybersecurity risks remain key concerns. Overall, a HOLD rating is suggested, pending further observation of the impact of macroeconomic factors on rental demand and the company’s ability to manage expenses.

Company Overview

American Homes 4 Rent (AMH) is a leading single-family rental REIT, focused on acquiring, developing, renovating, leasing, and managing single-family homes. The company operates primarily through its Operating Partnership, American Homes 4 Rent, L.P. As of December 31, 2024, AMH owned 61,336 single-family properties across 24 states. The company’s strategy involves a mix of traditional acquisitions, built-for-rental development, and a national builder program.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management emphasizes growth through its internal development program and disciplined property acquisition process. The narrative highlights the company’s focus on high-growth markets and efficient property management. A key takeaway is the increasing importance of the AMH Development program in driving portfolio growth. However, management acknowledges the impact of seasonality and potential risks related to adverse weather conditions.

Financial Statement Analysis

Key Ratios and Trends

Revenue Growth: Rents and other single-family property revenues increased by 6.5% year-over-year.
Occupancy: Average Occupied Days Percentage was 94.2%.
Rent per Property: Average Monthly Realized Rent per Property was $2,239.
Core NOI: Core NOI increased to $978.3 million from $904.8 million.
Turnover: Employee turnover was 25.1%.

Visual Aids

Geographic Concentration: 58% of operating properties are located in Atlanta, GA, Charlotte, NC, Dallas-Fort Worth, TX, Nashville, TN, Phoenix, AZ, Jacksonville, FL, Indianapolis, IN, Tampa, FL, Las Vegas, NV and Houston, TX.

Average Property Age: The average property age is 17.7 years, with an average year of purchase or delivery in 2016.

Uncommon Metrics

AMH Development Program Deliveries: 2,356 total home deliveries through the AMH Development Program.
Employee Turnover: 25.1% employee turnover rate.
OSHA Recordable Incident Rate: 1.4, below both the historical national average rate and the company’s historical average rate.

Risk and Opportunity Assessment

Risks

Concentration Risk: Significant geographic concentration exposes the company to regional economic downturns and natural disasters.
Renovation Costs: Inability to control renovation costs could adversely affect operating results.
Competition: Intense competition for acquisitions and tenants may limit strategic opportunities.
Cybersecurity: Increasing cybersecurity threats could compromise sensitive data and disrupt operations.
Interest Rate Risk: Elevated interest rates could adversely impact the company and its tenants.
HOA Restrictions: HOA rules and restrictions subject the company to increased costs and restrict business operations.

Opportunities

AMH Development Program: Internal development program offers attractive risk-adjusted returns.
Geographic Diversification: Continued expansion into select submarkets of MSAs.
Efficient Property Management: In-house property management enables optimization of rental revenues and expense management.
Brand Recognition: Establishing a nationally recognized brand can attract and retain residents and qualified personnel.
Long-Term Demand: Persistent national housing shortage and demographic trends support long-term demand for single-family rentals.

Conclusion and Actionable Insights

AMH demonstrates solid operational performance and strategic execution. The company’s focus on internal development and efficient property management positions it well for future growth. However, investors should closely monitor the impact of rising property taxes, interest rate volatility, and cybersecurity risks. A HOLD rating is suggested, pending further observation of the impact of macroeconomic factors on rental demand and the company’s ability to manage expenses.

American Homes 4 Rent Financial Analysis (Year Ended 2024)

1. Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin:
- Calculation: ($1,728,697 – $625,883) / $1,728,697 = 63.80%
- Trend: ($1,623,605 – $599,459) / $1,623,605 = 63.08%. Percentage Change: (63.80% – 63.08%) / 63.08% = 1.14%
- Industry: The average gross profit margin for the Real Estate industry is around 50%. AMH’s gross profit margin is higher than the industry average.
Operating Profit Margin:
- Calculation: $468,142 / $1,728,697 = 27.08%
- Trend: $432,142 / $1,623,605 = 26.62%. Percentage Change: (27.08% – 26.62%) / 26.62% = 1.73%
- Industry: The average operating profit margin for the Real Estate industry is around 20%. AMH’s operating profit margin is higher than the industry average.
Net Profit Margin:
- Calculation: $468,142 / $1,728,697 = 27.08%
- Trend: $432,142 / $1,623,605 = 26.62%. Percentage Change: (27.08% – 26.62%) / 26.62% = 1.73%
- Industry: The average net profit margin for the Real Estate industry is around 15%. AMH’s net profit margin is higher than the industry average.
Return on Assets (ROA):
- Calculation: $468,142 / $13,381,151 = 3.50%
- Trend: $432,142 / $12,688,190 = 3.41%. Percentage Change: (3.50% – 3.41%) / 3.41% = 2.64%
- Industry: The average ROA for the Real Estate industry is around 2%. AMH’s ROA is higher than the industry average.
Return on Equity (ROE):
- Calculation: $398,482 / $7,160,016 = 5.57%
- Trend: $366,224 / $6,967,524 = 5.26%. Percentage Change: (5.57% – 5.26%) / 5.26% = 5.89%
- Industry: The average ROE for the Real Estate industry is around 5%. AMH’s ROE is slightly higher than the industry average.
Earnings Per Share (EPS) – Basic and Diluted:
- Basic Calculation: $398,482 / 367,454,012 = $1.08
- Diluted Calculation: $398,482 / 367,989,537 = $1.08
- Trend: Basic EPS: $366,224 / 362,024,968 = $1.01. Diluted EPS: $366,224 / 362,477,216 = $1.01. Percentage Change: (1.08 – 1.01) / 1.01 = 6.93%
- Industry: The EPS varies widely across the Real Estate industry.

Liquidity

Current Ratio:
- Calculation: ($199,413 + $150,803 + $48,452 + $337,379) / $521,759 = 1.41
- Trend: ($59,385 + $162,476 + $42,823 + $406,138) / $573,660 = 1.17. Percentage Change: (1.41 – 1.17) / 1.17 = 20.51%
- Industry: The average current ratio for the Real Estate industry is around 1.0. AMH’s current ratio is higher than the industry average.
Quick Ratio (Acid-Test Ratio):
- Calculation: ($199,413 + $150,803 + $48,452) / $521,759 = 0.76
- Trend: ($59,385 + $162,476 + $42,823) / $573,660 = 0.46. Percentage Change: (0.76 – 0.46) / 0.46 = 65.22%
- Industry: The average quick ratio for the Real Estate industry is around 0.5. AMH’s quick ratio is higher than the industry average.
Cash Ratio:
- Calculation: ($199,413 + $150,803) / $521,759 = 0.67
- Trend: ($59,385 + $162,476) / $573,660 = 0.39. Percentage Change: (0.67 – 0.39) / 0.39 = 71.79%
- Industry: The average cash ratio for the Real Estate industry is around 0.2. AMH’s cash ratio is higher than the industry average.

Solvency/Leverage

Debt-to-Equity Ratio:
- Calculation: $5,010,762 / $7,160,016 = 0.70
- Trend: $4,461,647 / $6,967,524 = 0.64. Percentage Change: (0.70 – 0.64) / 0.64 = 9.38%
- Industry: The average debt-to-equity ratio for the Real Estate industry is around 1.0. AMH’s debt-to-equity ratio is lower than the industry average.
Debt-to-Assets Ratio:
- Calculation: $5,010,762 / $13,381,151 = 0.37
- Trend: $4,461,647 / $12,688,190 = 0.35. Percentage Change: (0.37 – 0.35) / 0.35 = 5.71%
- Industry: The average debt-to-assets ratio for the Real Estate industry is around 0.5. AMH’s debt-to-assets ratio is lower than the industry average.
Interest Coverage Ratio (Times Interest Earned):
- Calculation: ($468,142 + $165,351) / $165,351 = 3.83
- Trend: ($432,142 + $140,198) / $140,198 = 4.08. Percentage Change: (3.83 – 4.08) / 4.08 = -6.13%
- Industry: The average interest coverage ratio for the Real Estate industry is around 3.0. AMH’s interest coverage ratio is higher than the industry average.

Activity/Efficiency

Asset Turnover:
- Calculation: $1,728,697 / $13,381,151 = 0.13
- Trend: $1,623,605 / $12,688,190 = 0.13. Percentage Change: (0.13 – 0.13) / 0.13 = 0.00%
- Industry: The average asset turnover for the Real Estate industry is around 0.2. AMH’s asset turnover is lower than the industry average.

Valuation

Price-to-Earnings Ratio (P/E):
- Calculation: $35.14 / $1.08 = 32.54
- Trend: $35.14 / $1.01 = 34.79. Percentage Change: (32.54 – 34.79) / 34.79 = -6.47%
- Industry: The average P/E ratio for the Real Estate industry is around 20. AMH’s P/E ratio is higher than the industry average.
Price-to-Book Ratio (P/B):
- Calculation: (368,987,993 * $35.14) / $7,160,016 = 1.81
- Industry: The average P/B ratio for the Real Estate industry is around 1.0. AMH’s P/B ratio is higher than the industry average.
Price-to-Sales Ratio (P/S):
- Calculation: (368,987,993 * $35.14) / $1,728,697,000 = 7.50
- Industry: The average P/S ratio for the Real Estate industry is around 2.0. AMH’s P/S ratio is higher than the industry average.
Enterprise Value to EBITDA (EV/EBITDA):
- Calculation: Market Cap = 368,987,993 * $35.14 = $12,964,847,798. EV = $12,964,847,798 + $5,010,762 – $350,216 = $17,625,394,582. EBITDA = $1,110,503. EV/EBITDA = $17,625,394,582 / $1,110,503 = 15.87
- Industry: The average EV/EBITDA for the Real Estate industry is around 12. AMH’s EV/EBITDA is higher than the industry average.

Growth Rates

Revenue Growth:
- Calculation: ($1,728,697 – $1,623,605) / $1,623,605 = 6.47%
Net Income Growth:
- Calculation: ($468,142 – $432,142) / $432,142 = 8.33%
EPS Growth:
- Calculation: ($1.08 – $1.01) / $1.01 = 6.93%

Other Relevant Metrics

Same-Home Core Revenue Growth:
- Calculation: ($1,328,285 – $1,265,168) / $1,265,168 = 4.99%
Same-Home Core Property Operating Expense Growth:
- Calculation: ($457,891 – $438,928) / $438,928 = 4.32%
Same-Home Core NOI Growth:
- Calculation: ($870,394 – $826,240) / $826,240 = 5.34%
Occupancy:
- Average Occupied Days Percentage: 94.2%
Rent:
- Average Monthly Realized Rent per Property: $2,239

2. Commentary

American Homes 4 Rent demonstrates solid financial performance with improvements in profitability, liquidity, and solvency ratios compared to the previous year. Revenue and net income experienced healthy growth, driven by strong same-home core revenue and NOI growth. While valuation ratios are high compared to industry averages, this could reflect investor expectations for future growth. The company maintains a conservative leverage profile, and its focus on core revenue and expense management is evident in the improved efficiency metrics. Overall, AMH exhibits a stable and growing financial position within the single-family rental market.