AMH
AMH
Accumulate 2026-03-25
Model
DDM
Price at Report
$27.56
Base IV
$31.95
Bear IV
$21.48
Bull IV
$43.18
Entry Zone: 23-29 · Sell Above: 37
Bore Family Office
Valuation Report — American Homes 4 Rent (AMH) • March 25, 2026
3-Stage DDM (Ke) • Discount Rate: 8.65% • Current Price: $27.56
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
American Homes 4 Rent is the second-largest publicly traded single-family rental REIT in the United States, owning approximately 60,000 homes across 21 states. Founded in 2012 by B. Wayne Hughes (founder of Public Storage), AMH went public in 2013 and has grown into a ~$10B market-cap operator focused on Sun Belt and high-growth suburban markets. The company benefits from the structural shift toward renting vs. buying as home affordability remains challenged.
AMH generated $1.85B in revenue in FY2025 (+7% YoY) with an industry-leading EBITDA margin of 51.7%. FFO/share was approximately $2.54, supporting a $1.32 annual dividend at a conservative 52% FFO payout ratio. The company's build-to-rent development program (AMH Development) is a key differentiator, enabling the construction of new, higher-quality homes at attractive yields vs. open-market acquisitions. AMH competes primarily with Invitation Homes (INVH) and a fragmented landscape of smaller operators.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Same-Home Portfolio | $1,550M | 84% | +5.0% | — | Core stabilized portfolio; ~55,000 homes; 96%+ occupancy |
| Recently Acquired/Developed | $230M | 12% | +15.0% | — | New homes ramping to stabilization; build-to-rent pipeline |
| Other Revenue | $70M | 4% | +3.0% | — | Property management fees, utility reimbursements, other |
| Blended Growth Rate | — | 100% | +6.1% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 6.4% | <8% weak |
| FCF Margin | 51.7% | ≥10% strong |
| Debt / EBITDA | 5.0x | 2–5x moderate |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $1,304 | $1,491 | $1,624 | $1,729 | $1,850 |
| Rev YoY Growth | — | +14.3% | +8.9% | +6.5% | +7.0% |
| Gross Margin | 55.0% | 55.4% | 55.5% | 56.3% | 56.8% |
| EBITDA ($M) | $645 | $728 | $809 | $869 | $956 |
| EBITDA Margin | 49.5% | 48.8% | 49.8% | 50.3% | 51.7% |
| Operating Income ($M) | $272 | $302 | $353 | $392 | $452 |
| Operating Margin | 20.9% | 20.3% | 21.7% | 22.7% | 24.4% |
| Net Income ($M) | $135 | $251 | $366 | $398 | $439 |
| Net Margin | 10.4% | 16.8% | 22.5% | 23.0% | 23.7% |
| EPS (diluted) | $0.41 | $0.71 | $1.01 | $1.08 | $1.18 |
| Free Cash Flow ($M) | $-1,249 | $-1,088 | $-428 | $-686 | $-129 |
| Annual DPS | $0.400 | $0.720 | $0.880 | $1.040 | $1.200 |
| Total Debt ($M) | $3,880 | $4,516 | $4,462 | $5,371 | $4,736 |
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.790 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 8.65% | Ke = Rf + β × ERP |
📈 DDM Scenarios
$21
🔴 Bear
$32
📊 Base
$43
🚀 Bull
$27.56
Current Price
$35
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.5% | 2.0% | 8.65% | $21 | ▼22.1% |
| 📊 Base | 8.0% | 5.0% | 3.0% | 8.65% | $32 | ▲15.9% |
| 🚀 Bull | 12.0% | 7.0% | 3.5% | 8.65% | $43 | ▲56.7% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.0% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.360 | $1.251 | $1.25 |
| Year 2 | Stage 1 | $1.400 | $1.186 | $2.44 |
| Year 3 | Stage 1 | $1.442 | $1.125 | $3.56 |
| Year 4 | Stage 1 | $1.486 | $1.066 | $4.63 |
| Year 5 | Stage 1 | $1.530 | $1.011 | $5.64 |
| Year 6 | Stage 2 | $1.568 | $0.953 | $6.59 |
| Year 7 | Stage 2 | $1.608 | $0.899 | $7.49 |
| Year 8 | Stage 2 | $1.648 | $0.849 | $8.34 |
| Year 9 | Stage 2 | $1.689 | $0.801 | $9.14 |
| Year 10 | Stage 2 | $1.731 | $0.755 | $9.90 |
| Terminal | — | TV=$26.56 | PV(TV)=$11.58 (54% of IV) | $21.48 |
| Intrinsic Value | — | — | PV(Divs) $9.90 + PV(TV) $11.58 | $21.48 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (8.65%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $26.56. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $11.58). Intrinsic value = PV of all dividends ($9.90) + PV of terminal value ($11.58) = $21.48 per share.
Base Scenario
Stage 1: 8.0% | Stage 2: 5.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.426 | $1.312 | $1.31 |
| Year 2 | Stage 1 | $1.540 | $1.304 | $2.62 |
| Year 3 | Stage 1 | $1.663 | $1.296 | $3.91 |
| Year 4 | Stage 1 | $1.796 | $1.289 | $5.20 |
| Year 5 | Stage 1 | $1.940 | $1.281 | $6.48 |
| Year 6 | Stage 2 | $2.036 | $1.238 | $7.72 |
| Year 7 | Stage 2 | $2.138 | $1.196 | $8.92 |
| Year 8 | Stage 2 | $2.245 | $1.156 | $10.07 |
| Year 9 | Stage 2 | $2.357 | $1.117 | $11.19 |
| Year 10 | Stage 2 | $2.475 | $1.080 | $12.27 |
| Terminal | — | TV=$45.13 | PV(TV)=$19.68 (62% of IV) | $31.95 |
| Intrinsic Value | — | — | PV(Divs) $12.27 + PV(TV) $19.68 | $31.95 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (8.65%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $45.13. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $19.68). Intrinsic value = PV of all dividends ($12.27) + PV of terminal value ($19.68) = $31.95 per share.
Bull Scenario
Stage 1: 12.0% | Stage 2: 7.0% | Terminal: 3.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.478 | $1.361 | $1.36 |
| Year 2 | Stage 1 | $1.656 | $1.403 | $2.76 |
| Year 3 | Stage 1 | $1.855 | $1.446 | $4.21 |
| Year 4 | Stage 1 | $2.077 | $1.490 | $5.70 |
| Year 5 | Stage 1 | $2.326 | $1.536 | $7.24 |
| Year 6 | Stage 2 | $2.489 | $1.513 | $8.75 |
| Year 7 | Stage 2 | $2.663 | $1.490 | $10.24 |
| Year 8 | Stage 2 | $2.850 | $1.467 | $11.71 |
| Year 9 | Stage 2 | $3.049 | $1.445 | $13.15 |
| Year 10 | Stage 2 | $3.263 | $1.423 | $14.58 |
| Terminal | — | TV=$65.57 | PV(TV)=$28.60 (66% of IV) | $43.18 |
| Intrinsic Value | — | — | PV(Divs) $14.58 + PV(TV) $28.60 | $43.18 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (8.65%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $65.57. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $28.60). Intrinsic value = PV of all dividends ($14.58) + PV of terminal value ($28.60) = $43.18 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.6% | $40 | $43 | $46 | $51 | $57 |
| 7.1% | $36 | $38 | $41 | $45 | $49 |
| 7.6% | $33 | $35 | $37 | $40 | $43 |
| 8.1% | $30 | $32 | $33 | $36 | $38 |
| 8.6% | $28 | $29 | $31 | $32 | $34 |
| 9.1% | $26 | $27 | $28 | $29 | $31 |
| 9.6% | $24 | $25 | $26 | $27 | $29 |
| 10.1% | $23 | $23 | $24 | $25 | $26 |
| 10.6% | $21 | $22 | $23 | $23 | $24 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/FFO | Div Yield | FFO Payout | Debt/EBITDA | Note |
|---|---|---|---|---|---|
| AMH (current) | 10.9x | 4.79% | 52% | 5.0x | Single-family rental; build-to-rent pipeline |
| INVH (Invitation Homes) | 14.2x | 3.5% | 65% | 5.8x | Largest SFR REIT; ~85,000 homes |
| MAA (Mid-America Apt) | 15.8x | 4.1% | 68% | 4.2x | Sun Belt apartments; premium valuation |
| EQR (Equity Residential) | 16.5x | 4.0% | 72% | 4.5x | Coastal/urban apartments |
| NNN (NNN REIT) | 12.3x | 5.0% | 70% | 5.1x | Triple-net retail; stable income |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.320 |
| Current Yield | 4.79% |
| Consecutive Growth Years | 5 |
| 1-yr DPS CAGR | +13.9% |
| 3-yr DPS CAGR | +22.5% |
| 5-yr DPS CAGR | +27.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 104.0% ⚠️ |
| FCF Payout Ratio | 52.0% |
| Sustainability Verdict | Safe |
AMH's dividend is extremely well-covered on an FFO basis with a 52% FFO payout ratio ($1.32 DPS / $2.54 FFO per share). While the GAAP EPS payout ratio exceeds 100% (typical for REITs due to depreciation), the FFO-based payout is conservative relative to REIT peers (avg 65-75% FFO payout).
DPS has grown from $0.40 in 2021 to $1.32 (annualized) in 2026 — a 27% 5-year CAGR from a low base. With significant FFO headroom, management can sustain 8-10% annual DPS growth for years while the payout ratio normalizes toward 65-70%. The build-to-rent development program provides visibility into continued FFO growth, further supporting dividend sustainability.
DPS has grown from $0.40 in 2021 to $1.32 (annualized) in 2026 — a 27% 5-year CAGR from a low base. With significant FFO headroom, management can sustain 8-10% annual DPS growth for years while the payout ratio normalizes toward 65-70%. The build-to-rent development program provides visibility into continued FFO growth, further supporting dividend sustainability.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.41 | — | — | — | Actual |
| 2022 | $0.71 | — | — | — | Actual |
| 2023 | $1.01 | — | — | — | Actual |
| 2024 | $1.08 | — | — | — | Actual |
| 2025 | $1.18 | — | — | — | Actual |
| 2026 | $0.47 | $0.74 | $1.14 | 10 | Estimate |
| 2027 | $0.56 | $0.82 | $1.16 | 10 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.3B | — | — | — | Actual |
| 2022 | $1.5B | — | — | — | Actual |
| 2023 | $1.6B | — | — | — | Actual |
| 2024 | $1.7B | — | — | — | Actual |
| 2025 | $1.9B | — | — | — | Actual |
| 2026 | $1.6B | $1.9B | $2.2B | 22 | Estimate |
| 2027 | $1.7B | $2.0B | $2.4B | 19 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Adam Kramer | Morgan Stanley | Buy | $39 | +41.5% |
| James Feldman | Wells Fargo | Buy | $34 | +23.4% |
| Richard Hightower | Barclays | Hold | $31 | +12.5% |
| Omotayo Okusanya | Deutsche Bank | Hold | $30 | +8.9% |
| Haendel St. Juste | Mizuho | Hold | $29 | +5.2% |
💡 Investment Thesis
- Structural Tailwind — Housing Affordability: With median home prices still elevated and mortgage rates above 6%, the rent-vs-buy calculus increasingly favors renting. AMH's Sun Belt/suburban focus positions it in the highest-growth rental markets in the U.S. Single-family rentals offer a lifestyle upgrade vs. apartments — larger floor plans, yards, school districts — attracting higher-income tenants with lower turnover.
- Build-to-Rent Competitive Advantage: AMH Development allows the company to construct purpose-built rental homes at 150-200bps higher yields than open-market acquisitions. This pipeline provides predictable, high-quality growth with lower maintenance capex and superior tenant appeal vs. scattered-site acquisitions.
- Dividend Growth Runway: At a 52% FFO payout ratio (vs. REIT avg 65-75%), AMH has substantial capacity for continued double-digit dividend growth. DPS has compounded at ~27% CAGR over the past 5 years from a low base, and 8-10% annualized growth is highly sustainable going forward.
- Valuation Discount: At $27.56 (near 52-week lows), AMH trades at a ~21% discount to the analyst consensus PT of $34.86 and well below its 52-week high of $39.49. The selloff appears driven by broader REIT sector weakness from higher rates, not AMH-specific fundamental deterioration.
- Key Risk — Interest Rate Sensitivity: As a leveraged REIT ($4.7B debt), AMH is sensitive to interest rate movements. Sustained higher-for-longer rates could compress cap rates, slow acquisition activity, and pressure FFO growth. Additionally, a housing market correction could reduce property values and impair NAV.
⚖️ DDM Verdict: Accumulate — American Homes 4 Rent (AMH)
Current price: $27.56 | Analyst Avg PT: $34.86
$21
🔴 Bear
$32
📊 Base
$43
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$29 | Begin position |
| Tier 2 — Add | ≤$27 | Add on weakness |
| Tier 3 — Full | ≤$23 | Full allocation |
| Sell Alert | ≥$37 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
AMH at $27.56 is an Accumulate with a Base DDM target of ~$34. The stock trades near its 52-week low and offers a 4.8% dividend yield with substantial growth potential. The 52% FFO payout ratio provides a wide margin of safety for the dividend and room for continued 8-10% annual DPS increases.
The single-family rental sector benefits from secular tailwinds (housing affordability, demographic shifts) and AMH's build-to-rent platform provides a differentiated growth engine. At current levels, investors are being paid to wait with a nearly 5% yield while the rate cycle turns.
Action: Accumulate below $29. Add aggressively on pullbacks to $25-26 (Bear case zone). Full position at current levels for income-oriented portfolios. Trim above $38 (approaching Bull case).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| DPS Base — REIT DDM | Used current DPS of $1.32/yr as the DDM base. FFO/share is ~$2.54 (FY2025), implying a 52% FFO payout ratio. This is conservative vs. REIT peers (65-75% avg). The low payout ratio is the primary driver of dividend growth potential — DPS can grow 8-10%/yr for several years even with modest FFO growth as payout normalizes. |
| Ke | Beta 0.79 (Finnhub). Rf=4.30% (10yr UST Mar 2026), ERP=5.5%. Ke = 4.30% + 0.79 × 5.5% = 8.65%. REIT — no corporate income tax on distributed earnings, so Ke (not WACC) is the appropriate discount rate. |
| FFO vs. GAAP EPS | GAAP EPS ($1.18 FY2025) understates AMH's earning power because real estate depreciation (~$504M/yr) is a non-cash charge that doesn't reflect actual asset impairment (home values generally appreciate). FFO = Net Income + D&A ≈ $943M or $2.54/share — this is the standard REIT earnings metric. Dividend coverage on FFO is 1.9x — extremely healthy. |
| Sanity Check | Analyst consensus PT $34.86. Base IV target ~$34 — within the ±20% threshold. Cross-check: at $34, implied P/FFO = 13.4x (vs. current 10.9x) — reasonable for a high-growth SFR REIT with build-to-rent upside. INVH trades at 14.2x P/FFO. |
| Negative FCF — Not a Red Flag | AMH reports negative free cash flow because growth capex (acquisitions and build-to-rent development) is lumped into total capex. Operating cash flow is $864M and growing. The negative FCF is discretionary growth investment, not a cash flow problem. FFO and AFFO are the correct profitability measures. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.