On the four Ms, Invitation Homes earns 18 for management and 70 for moat. The management score rests on a return on invested capital of 4.0% and a gross margin of 3.7% — figures that describe capital earning less than it costs to employ. Debt sits at 0.88x equity. A solid moat alongside weak management is a combination worth understanding before the price matters at all.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 8.4% a year, the rate measured from the filings. The exit multiple assumed is 16.8x. That produces an intrinsic value of $10.16, a 10-CAP price of $18.87 and a payback time price of $22.08, with the value zone set at the highest of the three, $22.08. Today's price of $26.40 sits 20% above it.
The price is above the value zone and the business scores 70 for moat and 18 for management. Neither test argues for paying up here.
| Price | $26.40 |
| Market cap | $15.7B |
| P/E ratio | 24.2x |
| Return on invested capital | 4.0% |
| Gross margin | 3.7% |
| Debt to equity | 0.88x |
| Free cash flow yield | 5.7% |
| Growth rate used | 8.4% |
| Growth rate measured | 8.0% |
| Exit multiple assumed | 16.8x |
| Company | Moat | Buy price |
| Essex Property Trust (ESS) | 38 | $165.20 |
| Mid-America Apartment Communities (MAA) | 25 | $62.40 |
| UDR, Inc. (UDR) | 40 | $28.86 |
| Camden Property Trust (CPT) | 51 | $81.52 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Invitation Homes rather than accepting ours.