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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Avalonbay Communities, Inc. (XNYS:AVB) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
AVB
Name:
AVALONBAY COMMUNITIES, INC. (XNYS:AVB)
Sector:
311.74M
Industry:
REIT�Residential
CEO:
Mr. Timothy Naughton
Total Employees:
2,927
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -105.18% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF AVALONBAY COMMUNITIES, INC.(AVB) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND REIT�RESIDENTIAL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
202.51
One Month Price Target:
$203.59
Six Month Price Target :
$208.96
Likely Price in One Year's Time:
Ticker:
$215.41
Likely Trading Range Today Under (Normal Volatility)
$201.79
Price Upper limit ($) :
$203.31
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$193.35
This week:
$182.03
This month :
$161.54
Other Primary facts
Market Cap:
28.96B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
139.83M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.31%
-15.37%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$245.04
$225.62
$159.98
$179.40
Medium risk (<10%) entry points
Buy Call
Sell Call
$219.31
Buy Put:
Sell Put:
$215.16
$185.66
$189.86
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
AVB
Sharpe Ratio:
0.41%
Comparison:
AVB, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -74.15% lower than the industry
& is -82.01% lower than the market/S&P 500 average
Average Returns/Yield of
AVB
Daily returns:
0.02%
Weekly returns:
0.09%
Monthly returns:
0.36%
Yearly returns:
13.06%
Comparison of returns:
Average annual returns/yield (last 3 years) is -67.07% below industry average
Classification:
AVB, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.83
Statistical test of Returns:
AVB has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.21%
Weekly Volatility:
4.94%
Monthly Volatility:
9.89%
Yearly Volatility:
34.26%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.29%
Volatility in last five trading days has been -41.84% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.52%
Weekly VaR:
-10.12%
Monthly VaR:
-20.23%
How Much Can the price of
AVB
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-18%
Worst case (decline):
-70.08%
This translates to price declining to:
$166.69
This translates to price declining to:
$60.59
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
AVB is a 42.78% riskier investment compared to the market/S&P 500 & is 22.32% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -9.82% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
AVB
Beta in relation to market/S&P 500--0.95
Expected beta in 1 year's time:
0.771
Expected beta in 3 year's time:
1.09
Unlevered (debt free) Beta:
0.545
Beta in relation to Nasdaq (XNAS):
0.617
Beta in relation to all global stocks::
0.758
Beta Comparison & Analysis
Beta of competitors/peers::
1.252
Beta is -24.28% lower than peers
Average Industry Beta:
0.785
Beta is 20.71% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
1.07%
Sustainable growth rate is -79.78% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.053
Alpha is -218.07% below industry average alpha yield
Alpha is -340% below the market average
Analysis of Cost of Capital of
AVB
Equity cost of capital:
0.096
Equity cost of capital is 13.06% above industry mean WACC
Unlevered (without debt) cost of capital:
5.55%
Before-tax cost of debt:
2.74%
After-tax cost of debt:
2.17%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.17%
WACC is 10.24% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$16.86
Revenue growth rate per share of (3Y):
2.58
Annual revenue growth rate is -115.12% below industry average
EPS:
$8.02
Expected Annual growth rate of EPS (3Y):
8.33%
Expected future EPS growth rate is 64.61% higher than the REIT�Residential industry
Free cash flow (FCF) per share:
$7.61
Balance sheet equity growth per share: 8.55%
Equity growth rate per share is -306.90% lower than the industry
Debt per share
$58.45
EBITDA per share
$15.26
Valuation Analysis Today of
AVB
P/E Ratio:
34.84
P/E Ratio of Competitors/Peers:
29.35
P/E ratio is 18.69% higher than main peers & is -47.46% lower than the industry
Stock price/value with industry average P/E ratio: $531.85
AVB is -61.92% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $83.98
Present value of the expected future dividends only: $69.57
P/S (Price to Sales ratio):
12.01
Price to sales ratio is 2.44% above the industry mean
P/B (Price to book value ratio):
2.58
Price to free cash flow: 26.63
Price to free cash flow ratio is -5.06% lower than the industry
Net income growth rate (3Y):
1.46%
Net income growth rate is -100.14% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 19.85%
Dividend yeild: 3.14%
Previous Dividend: $1.59
Previous adjusted dividend: $1.59
Previous Dividend: $6.36
Expected next dividend best case: $1.61
Expected next dividend worst case: $1.57
Average dividend payment (long-term): $1.58
Average dividend increase/decrease (growth rate) % per period: 0.46%
Expected next dividend payment date: 13/10/2022
Expected next dividend record date: 28/09/2022
-
Previous dividend payment date: 15/07/2022
Previous dividend record date: 30/06/2022
-
Dividend History:
2022-06-29--$1.59
2021-12-30--$1.59
2021-06-29--$1.59
2022-03-30--$1.59
2021-10-01--$1.59
2021-03-30--$1.59
Dividend growth rate is -101.70% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
74.46%
Net debt to equity ratio:
71.33%
Debt to assets ratio:
41.13%
Net debt to assets ratio:
39.40%
Debt-to-asset ratio is -19.32% below industry average
Ability to repay debt:
Interest coverage ratio:
9.52
Interest coverage ratio is 263.66% more than industry average
Looking forward:
Debt growth rate:
-15.30%
Annual debt growth is 243% higher than industry average debt growth rate
Debt repayment rate in last quarter: 1.21%
Analysis of Key Statistics
Correlation of price movement with the market:
0.664
Statistical significance of correlation:
AVB has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.63
Stock price is 5.39% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.63
Correlation of price movement with Nasdaq (^IXIC):
0.07
Covariance of price movement with the market:
0.09
Kurtosis
10.717
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.38
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
AVB
Gross Profit Margin Ratio:
253%
Operating Profit Margin Ratio:
27.33%
Operating profit margin is -10.13% lower than the industry
Net Profit Margin Ratio:
253%
Effective Tax Rate:
0.79%
Effective tax rate is -40.76% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
10.24%
Return on equity (ROE) is 20.10% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
5.66%
Return on assets (ROA) is 61.28% higher than the industry
Financial Leverage:
1.7x
Current Ratio:
1.08
Current ratio is -88.43% below industry average
Cash Conversion Cycle (days):
18.4
Cash conversion cycle is 29.33% above industry average
The remaining useful life of property plant & equipment is: 6.7 years
Stock based compensation to net income ratio:
0.62%
In-depth Efficiency Analysis
Revenue generated per employee:
805.5K
Each employee generates 0% less revenue than industry average revenue per employee
EBITDA generated per employee:
729.2K
Each employee generates 24% more EBITDA than industry average revenue per employee
Profit generated per employee:
384.1K
Each employee generates 74% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
106.5K
Each employee generates 43% more free cash flow than industry average revenue per employee
Assets/Capital per employee
6.5M
Each employee generates 43% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
AVB
CBRE GROUP, INC. (XNYS:CBRE)
EQUITY RESIDENTIAL (XNYS:EQR)
ARENA EVENTS GROUP PLC (XLON:ARE)
WEYERHAEUSER COMPANY (XNYS:WY)
NRZ-PC
REALTY INCOME CORPORATION (XNYS:O)
EXTRA SPACE STORAGE INC. (XNYS:EXR)
INVITATION HOMES INC. (XNYS:INVH)
MID-AMERICA APARTMENT COMMUNITIES, INC. (XNYS:MAA)
Current Analyst Ratings
Strong buy�25%
Buy�29%
Hold�46%
Sell�0%
Strong sell�4%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
2.36B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
866.53M
1.49B
-
69.68M
69.68M
-
777.09M
846.77M
-
224.33M
777.09M
2.13B
644.35M
1.12B
1.13B
8.96M
1.12B
Statement of Cash Flow
Date:
Period:
201.79M
Differed Income Tax :
-
Stock Based Compensation :
6.97M
Change in Working Capital :
18.06M
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
- 145214.00K
Net Cash Provided by Operating Activities:
343.68M
Investments in PP&E:
-
Net Acquisitions:
- 3598.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
343.46M
-
343.46M
19.73M
-
346.06M
709.25M
148.29M
-
-
219.08M
-
18.79B
19.16B
-
19.87B
66.85M
-
-
-
587.92M
654.77M
8.17B
64.56M
8.24B
-
8.89B
1.40M
278.95M
- 14938.0K
10.71B
March 31, 2022 at 6:00:00 AM
1.71B
10.98B
19.87B
-
8.17B
7.8B
-
- 86602.00K
- 90200.00K
- 100362.00K
459.00K
-
- 223164.00K
- 16790.00K
- 339857.00K
-
- 86377.00K
457.41M
543.79M
343.68M
- 31944.00K
311.74M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
AVB
2023
2024
2025
2026
2027
$274.06
$291.52
$310.09
$329.85
$350.87