Smart Money Move: DOUGLAS BENHAM Grabs $268K Worth Of American Homes 4 Rent Stock

It was revealed in a recent SEC filing that DOUGLAS BENHAM, Director at American Homes 4 Rent AMH made a noteworthy insider purchase on May 9,.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Thursday showed that BENHAM purchased 11,581 shares of American Homes 4 Rent. The total transaction amounted to $268,946.

As of Friday morning, American Homes 4 Rent shares are up by 0.69%, currently priced at $36.65.

About American Homes 4 Rent

American Homes 4 Rent is a real estate investment trust primarily focused on acquiring, operating, and leasing single-family homes as rental properties throughout the United States. The company's real estate portfolio is largely comprised of single-family properties in urban markets in the Southern and Midwestern regions of the U.S. American Homes 4 Rent's land holdings also represent a sizable percentage of its total assets in terms of value. The company derives the vast majority of its income in the form of rental revenue from single-family properties through short-term or annual leases. The firm's largest geographical markets include Dallas, Texas; Indianapolis, Indiana; Atlanta, Georgia; and Charlotte, North Carolina in terms of the number of properties in each.

A Deep Dive into American Homes 4 Rent's Financials

Revenue Growth: American Homes 4 Rent's revenue growth over a period of 3 months has been noteworthy. As of 31 March, 2024, the company achieved a revenue growth rate of approximately 6.5%. This indicates a substantial increase in the company's top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Real Estate sector.

Insights into Profitability:

• Gross Margin: With a high gross margin of 55.77%, the company demonstrates effective cost control and strong profitability relative to its peers.

• Earnings per Share (EPS): American Homes 4 Rent's EPS reflects a decline, falling below the industry average with a current EPS of 0.3.

Debt Management: American Homes 4 Rent's debt-to-equity ratio is below the industry average at 0.64, reflecting a lower dependency on debt financing and a more conservative financial approach.

Financial Valuation:

• Price to Earnings (P/E) Ratio: American Homes 4 Rent's current Price to Earnings (P/E) ratio of 37.14 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: With a P/S ratio of 8.03 below industry standards, the stock shows potential undervaluation, making it an appealing investment option for those focusing on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): American Homes 4 Rent's EV/EBITDA ratio at 17.3 suggests potential undervaluation, falling below industry averages.

Market Capitalization Analysis: The company's market capitalization is below the industry average, suggesting that it is relatively smaller compared to peers. This could be due to various factors, including perceived growth potential or operational scale.

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Why Pay Attention to Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

In legal terms, an "insider" refers to any officer, director, or beneficial owner of more than ten percent of a company's equity securities registered under Section 12 of the Securities Exchange Act of 1934. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Cracking Transaction Codes

Delving into transactions, investors typically prioritize those unfolding in the open market, as precisely outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of American Homes 4 Rent's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.