Our NAV estimate is the result of applying a forward cap rate to annualized NOI. Our $41 target price represents a ~22x multiple on 2025E earnings and an ~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. If same store growth is better than expected and development accretion is higher than expected, this would likely result in higher-than-expected earnings growth and AMH could exceed our target price.