On the four Ms, Mid-America Apartment Communities earns 40 for management and 25 for moat. The management score rests on a return on invested capital of 5.6% and a gross margin of 31.8% — figures that describe returns closer to the cost of the capital behind them. Debt sits at 0.95x equity. A narrow moat alongside mixed management is a combination worth understanding before the price matters at all.
Three independent anchors set the price worth paying. Growth is modelled at 5.7% a year, below the 6.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 11.3x. That produces an intrinsic value of $16.57, a 10-CAP price of $60.42 and a payback time price of $62.40, with the value zone set at the highest of the three, $62.40. Today's price of $116.40 is 87% above it.
The price is above the value zone and the business scores 25 for moat and 40 for management. Neither test argues for paying up here.
| Price | $116.40 |
| Market cap | $13.5B |
| P/E ratio | 34.0x |
| Return on invested capital | 5.6% |
| Gross margin | 31.8% |
| Debt to equity | 0.95x |
| Free cash flow yield | 4.4% |
| Growth rate used | 5.7% |
| Growth rate measured | 6.0% |
| Exit multiple assumed | 11.3x |
| Company | Moat | Buy price |
| Invitation Homes (INVH) | 70 | $22.08 |
| UDR, Inc. (UDR) | 40 | $28.86 |
| Essex Property Trust (ESS) | 38 | $165.20 |
| 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 Mid-America Apartment Communities rather than accepting ours.