Our NAV estimate is the result of applying a forward cap rate to annualized NOI. Our $41 target price represents a ~21x multiple on 2026E earnings and a ~5% cap rate on forward NOI. We believe this valuation is reasonable given AMH’s consistently strong earnings growth profile, which will likely accelerate next year.

We see five potential risks to our target price being achieved: (1) less home price appreciation going forward; (2) the potential for increased tenant turnover due to home purchases if mortgage rates were to drop; (3) uncertainty around long-term capex needs; (4) development execution; and (5) high expectations for the company.  These downside risks are balanced by upside risks including: 1) increased NOI yields and earnings contribution from the development pipeline; 2) the potential for rent growth to accelerate in 2026 as supply dwindles further; and 3) a lower-than-expected interest rate environment, which drives REIT multiples broadly higher.