Market Cap : 9.37 B | Enterprise Value : 12.57 B | P/FFO : 23.62 | P/B : 1.59 |
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Operating Margin % is calculated as Operating Income divided by its Revenue. American Homes 4 Rent's Operating Income for the three months ended in Sep. 2020 was $63 Mil. American Homes 4 Rent's Revenue for the three months ended in Sep. 2020 was $311 Mil. Therefore, American Homes 4 Rent's Operating Margin % for the quarter that ended in Sep. 2020 was 20.30%.
Good Sign:
American Homes 4 Rent operating margin is expanding. Margin expansion is usually a good sign.
American Homes 4 Rent's 5-Year Average Operating Margin % Growth Rate was 28.20% per year.
American Homes 4 Rent's Operating Income for the three months ended in Sep. 2020 was $63 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Sep. 2020 was $246 Mil.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where American Homes 4 Rent's Operating Margin % falls into.
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
American Homes 4 Rent's Operating Margin % for the fiscal year that ended in Dec. 2019 is calculated as
Operating Margin % | = | Operating Income (A: Dec. 2019 ) | / | Revenue (A: Dec. 2019 ) |
= | 250.117 | / | 1143.378 | |
= | 21.88 % |
American Homes 4 Rent's Operating Margin % for the quarter that ended in Sep. 2020 is calculated as
Operating Margin % | = | Operating Income (Q: Sep. 2020 ) | / | Revenue (Q: Sep. 2020 ) |
= | 63.093 | / | 310.809 | |
= | 20.30 % |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
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