About Camden Property Trust
Camden properties are mighty popular down in the southern half of the United States, especially in the great state of Texas.
Owning and operating 171 properties with a total of 58,433 units across the United States, Camden can be thought of as a rather extensive real estate development company and operator, leasing its units to tenants, which of course is the company’s primary source of revenue and ultimately cash flow and profit.
Although the company currently has a sizable rental footprint in and around Texas, it is definitely worth mentioning that Camden also operates properties out west in regions such as Phoenix, Los Angeles, San Diego and Denver as well as Washington D.C., Raleigh, Tampa, Nashville and other geographies nearby.
Generally speaking, we tend to like housing companies, particularly apartment establishments for a few different reasons.
One, no matter how bad the state of the economy becomes, many will see housing as nothing but a necessity and while they may cut back (or cut completely) on other previously held essential expenses, having a place to live likely won’t be one of them. Additionally, we see an overwhelming trend in the future where today’s younger people will be less and less inclined to be homeowners and more interested in being as mobile and unconfined as possible.
Irrespective of how one feels about this trend, we view it as a prominent trend nevertheless and one that favors companies like Camden.
Now that some of the groundwork regarding the company has been laid, let’s get right into the company’s core finances and try to figure out whether or not Camden’s stock (NYSE: CPT) is one to invest in for the next ten years.
Camden’s stock financials
At a present share price of nearly $112, Camden has a market capitalization of just under $12 billion, a price-to-earnings (P/E) ratio of 14.73 and distributes an annual dividend of $3.76 to its shareholders, which at the time of the publication of this article (1/2/2023) is yielding 3.36%.
Things are off to a good start with Camden as its share price appears to be modestly undervalued given that its P/E ratio is below 20 tied with the fact that the company issues a sizable dividend of nearly $4.00 (annually) to its shareholders, which can more than likely be upheld even during times of economic uncertainty as this company probably generates a considerable amount of free cash flow.
Let’s get a little more comfortable with Camden.
Onto the company’s balance sheet, Camden’s executive team is responsible for tending to around $8 billion in total assets along with approximately $3.8 billion in total liabilities.
Although we have no shame in admitting that we initially assumed that this company would’ve been a little more total liability-heavy, we were sure pleased to find that Camden’s total assets outweigh its total liabilities by a wider margin than expected.
This implies that the company’s executives are good debt managers and deployers and that is definitely a redeeming quality during times of economic uncertainty, such as right now.
As it relates to the company’s income statement, Camden’s total revenue over the last five years has seen a steady rise, perched at $901 million in 2017, rising the following year to $955 million and peaking at its most recent value of nearly $1.15 billion, as reported in 2021.
Consistency in total revenue tends to be another perk when you’re in the rental housing space, as can be evidenced in Camden’s recent total revenue figures, which is surely not a negative for those who want to put some of their investable capital to work in a company that’s revenues are somewhat resistant to a recession.
According to the company’s cash flow statement, Camden’s net income has remained positive and relatively stagnant over the past five years, which is far from being a bad thing. For instance, the company’s net income in 2017 was $201 million and was last reported to be, at least as reported on TD Ameritrade’s platform, $312 million (2021).
Unsurprisingly, it can also be identified on the company’s cash flow statement that Camden’s total cash from operations has remained both strong and at elevated levels, floating around the $500 million area code during the same time period.
Camden’s stock fundamentals
For those who give a lot of credence to a strong, competitive trailing twelve month (TTM) net profit margin, we’re with you.
That’s just another reason to like Camden Property Trust and its stock.
Specifically, Camden’s TTM net profit margin stands at 61.52% compared to the industry’s average of 33.9%, according to TD Ameritrade’s platform.
It is safe to say that Camden knows its target market(s) and ultimately, its target customers.
To have a TTM net profit margin nearly double that of the average of the industry is far from a small accomplishment and gives us lots of overall confidence that Camden can keep carving out the profit it needs in order to stay total asset-heavy while also expanding its operations and remaining overwhelmingly right-side up.
Additionally, while impressive but not all that shocking, Camden’s TTM returns on assets and investment are also greater than the industry’s averages, as the company’s TTM returns on assets are a little more than 4% higher than the industry’s average along with the fact that the company’s TTM returns on investment are around 5% higher than that of the industry’s average.
Should you buy Camden Property Trust stock?
Not many pundits or business news networks are quick to bring up Camden Property Trust nor its stock, which is surprising to us.
Although it’s not a new, sleek technology company, it has many impressive financial metrics empowering it and a more than solid financial base on which to operate on moving forward.
While the real estate market can and has endured its fair share of encouraging ups and devastating downs as well as everything in between, if one were keen on investing in a property owner and rental company with a long-term investment perspective, it doesn’t appear as though Camden is a bad choice at all.
We give Camden Property Trust’s stock a “buy” rating.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.