AvalonBay Communities, Inc. (AVB) Buy or Sell Stock Guide

Last updated: Jun 04, '18

The analysis below may be helpful to you if you have any of the following questions about AVB stock:

  • Is AVB a buy or a sell?
  • Should I sell or hold AVB stock today?
  • Is AVB a good buy / a good investment?
  • What are AVB analyst opinions, recommendations, ratings?

Here are AVB stock buy reasons/signals:

1. A multibillion-dollar development pipeline differentiates AvalonBay, potentially adding risk but also excess returns versus acquisitions.

2. Positive demographic and economic trends and outlooks will fuel strong demand for apartment rentals, including a surge of millennials into adulthood, a population progressively pushing back major life decisions such as marriage and homeownership.

3. While the possibility of rising interest rates is generally negative for REITs, we believe AvalonBay's income growth outlook and low leverage will help insulate the firm.

4. AVB quarterly revenue growth was 12.60%, higher than the industry and sector average revenue growth (4.89% and 6.53%, respectively).

5. AVB forward dividend yield is 3.53%, higher than the industry (2.11%) and sector (1.19%) forward dividend yields.

6. AVB forward P/E ratio is 37.05, and it’s low compared to its industry peers’ P/E ratios.

7. AVB average analyst rating is Buy.

8. AVB average analyst price target ($185.05) is above its current price ($167.11).

Here are AVB stock sell reasons/signals:

1. Tight asset pricing is becoming increasingly sensitive as economic uncertainty increases and cap rates compress as a result of significant embedded income growth assumptions and amplified investment demand, especially in AvalonBay's core markets.

2. The string of historically outstanding performance results AvalonBay has posted will moderate because of a slowing economy and development of new supply.

3. With several alternatives to multifamily housing and short lease terms, demand for apartments can be more variable than many other commercial property types over time.

4. AVB profitability is declining. The YoY profit margin change was -9.93pp.

5. AVB Price/Sales ratio is 10.55, and it’s high compared to its industry peers’ P/S ratios.

6. AVB PEG ratio (P/E adjusted for growth) is 14.58, and it’s high compared to its industry peers’ PEG ratios.

7. AVB short interest (days to cover the shorts) ratio is 6.26. The stock garners more short interest than the average industry, sector or S&P 500 stock.

What are your thoughts on AVB?

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