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American Homes 4 Rent (AMH) Directors Are Buying Stock. Should We?

Trade AMH stock Your capital is at risk
Updated 20 May 2022

Key points:

  • American Homes 4 Rent (AMH) directors are buying its stock.
  • The real-estate firm rents out single-family homes that are in demand.
  • As a result, AMH stock looks like a buy at current prices, as outlined below.

The directors of American Homes 4 Rent (NYSE: AMH) are buying its stock following the latest downtrend after its shares fell aggressively in the past month from its April 22 high of $43.88 to its current price of $36.29.

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Some of the directors who have increased their shareholding in the company include Douglas N Benham, who bought 2,000 shares worth $50,000 on May 19, 2022, and 536 shares worth $13,400 on May 18. The shares were acquired at an average price of $25.

Tamara Hughes Gustavson, another AMH director, bought a whooping 200,000 shares worth $7,142,000 on May 12th, followed by another batch of 18,833 shares worth $673,468, but her last purchase of 536,167 shares on May 13th worth $19,843,514 was staggering.

It is always a positive sign when a company’s directors buy shares in the company since it shows that they are confident in its prospects. The recent purchases made by the directors are significant since they run into the millions.

However, simply because a firm’s directors are optimistic about its outlook does not mean that its stock will perform well.

The American Homes 4 Rent (AMH) stock has performed poorly recently amid the broader stock market rout, but the company’s recent performance is commendable. In addition, AMH released its quarterly results on May 5, 2022, where it beat analysts' expectations.

The company generated revenues worth $356.11 million during the quarters beating analysts' estimates of $355.76 million. The firm’s earnings per share were $0.16 versus consensus estimates of $0.11.

American Homes 4 Rent is a real estate company that owns single-family homes, which it rents out. While the rising inflation might threaten the broader housing market, demand for the company’s homes is likely to remain high as potential home buyers decide to rent.

The company also has impressive margins of 13.74%, which is decent. The decline in AMH stock could be attributed to lower analyst ratings. Analysts at JPMorgan recently lowered their AMH price target to $44 from $46 and set an ‘overweight’ rating.

I would buy AMH stock at current prices since it is trading near the $35.50 support level. However, a break below this level would invalidate this trade idea.

*This is not investment advice. Always do your due diligence before making investment decisions.

AMH stock price.

American Homes 4 Rent stock price 20-05-2022
Source: Tradingview

American Homes 4 Rent stock has fallen 15.6% in one month but could be headed higher.