It has been about a month since the last earnings report for AvalonBay Communities (AVB). Shares have lost about 1.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AvalonBay due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

AvalonBay Q4 FFO & Revenues Miss Estimates, Dividend Raised

AvalonBay reported a fourth-quarter 2024 core FFO per share of $2.80, which missed the Zacks Consensus Estimate of $2.83. However, the figure climbed 2.2% from the prior-year quarter’s tally.

The quarterly results reflected higher property management, other indirect operating expenses and interest expenses. However, a year-over-year increase in same-store residential revenues and same-store NOI have supported the results to an extent.

Total revenues in the quarter came in at $740.5 million, missing the Zacks Consensus Estimate marginally. The figure increased 5.1% on a year-over-year basis.

Quarter in Detail

In the reported quarter, same-store residential revenues increased 3.2% year over year to $670.1 million. Same-store residential operating expenses rose 5.4% to $208.1 million. As a result, the same-store residential NOI climbed 2.3% to $462.1 million.

Same-store average revenue per occupied home rose to $3,040 in the fourth quarter, up from $3,033 in the third quarter of 2024 and $2,944 in the year-ago quarter. While the same-store economic occupancy of 95.6% rose 10 basis points (bps) sequentially, it shrunk 10 bps year over year. Our estimate for the metric was 95.8%.

However, property management and other indirect operating expenses rose 40.1% year over year to $51.4 million. Interest expenses also increased 19.2% year over year to $59 million.

As of Dec. 31, 2024, AvalonBay had 17 consolidated development communities under construction (expected to contain 6,004 apartment homes and 59,000 square feet of commercial space). The estimated total capital cost of these development communities at completion is $2.25 billion.

Portfolio Activity

In the fourth quarter, AvalonBay acquired two wholly owned communities. These include Avalon Townhomes in Bee Cave, TX, comprising 126 townhomes for $49 million and Avalon Lowry in Denver, CO, with 347 apartment homes, for $136.5 million.

During the reported quarter, AvalonBay sold three wholly owned communities, namely Avalon New Canaan in New Canaan, CT, Avalon Berkeley in Berkeley, CA, and AVA Ballard in Seattle, WA. These three communities, which contained in total 463 apartment homes, were disposed of for $212.5 million, resulting in a gain in accordance with GAAP of $121.8 million.

Balance Sheet

AvalonBay had $108.6 million in unrestricted cash and cash equivalents and $158.5 million in restricted cash as of Dec. 31, 2024. As of the same date, the company did not have any borrowings outstanding under its $2.25 billion unsecured revolving credit facility or its $500 million unsecured commercial paper note program.

Additionally, its annualized net debt-to-core EBITDAre for the October-December period was 4.2 times, and the unencumbered NOI for the year ended Dec. 31, 2024 was 95%.

2025 Guidance

For the full year, AvalonBay expects core FFO per share between $11.14 and $11.64, rising 3.5% at the midpoint from the 2024 reported number.

Management expects same-store residential revenue growth of 2-4% and an operating expense increase of 3-5.2%. Same-store residential NOI is projected to expand 1.3-3.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, AvalonBay has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AvalonBay has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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AvalonBay Communities, Inc. (AVB) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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