Essex Property Trust (ESS) and Equity Lifestyle Properties (ELS) Critical Analysis

Equity Lifestyle Properties (NYSE: ELS) and Essex Property Trust (NYSE:ESS) are both mid-cap financials companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, profitability, institutional ownership, dividends and valuation.

Risk and Volatility

Equity Lifestyle Properties has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500. Comparatively, Essex Property Trust has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Insider & Institutional Ownership

97.9% of Equity Lifestyle Properties shares are held by institutional investors. Comparatively, 97.1% of Essex Property Trust shares are held by institutional investors. 6.1% of Equity Lifestyle Properties shares are held by company insiders. Comparatively, 3.3% of Essex Property Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Equity Lifestyle Properties and Essex Property Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity Lifestyle Properties 22.52% 21.07% 5.87%
Essex Property Trust 38.95% 8.19% 4.20%

Dividends

Equity Lifestyle Properties pays an annual dividend of $1.95 per share and has a dividend yield of 2.3%. Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 3.0%. Equity Lifestyle Properties pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essex Property Trust pays out 87.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Equity Lifestyle Properties has raised its dividend for 7 consecutive years and Essex Property Trust has raised its dividend for 24 consecutive years. Essex Property Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Equity Lifestyle Properties and Essex Property Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity Lifestyle Properties 0 5 0 0 2.00
Essex Property Trust 3 5 10 0 2.39

Equity Lifestyle Properties presently has a consensus price target of $86.20, indicating a potential upside of 1.13%. Essex Property Trust has a consensus price target of $269.40, indicating a potential upside of 16.01%. Given Essex Property Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Essex Property Trust is more favorable than Equity Lifestyle Properties.

Valuation & Earnings

This table compares Equity Lifestyle Properties and Essex Property Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Equity Lifestyle Properties $870.43 million 8.60 $173.26 million $2.09 40.78
Essex Property Trust $1.29 billion 11.85 $414.97 million $7.98 29.10

Essex Property Trust has higher revenue and earnings than Equity Lifestyle Properties. Essex Property Trust is trading at a lower price-to-earnings ratio than Equity Lifestyle Properties, indicating that it is currently the more affordable of the two stocks.

Summary

Essex Property Trust beats Equity Lifestyle Properties on 12 of the 17 factors compared between the two stocks.

Equity Lifestyle Properties Company Profile

Equity LifeStyle Properties, Inc. is a real estate investment trust (REIT). The Company is an owner and operator of lifestyle-oriented properties (properties) consisting primarily of manufactured home (MH) communities and recreational vehicle (RV) resorts and campgrounds. The Company operates through two segments: Property Operations and Home Sales and Rentals Operations. The Property Operations segment owns and operates land lease properties and the Home Sales and Rentals Operations segment purchases, sells and leases homes at the properties. It leases individual developed areas (sites) with access to utilities for placement of factory built homes, cottages, cabins or RVs. As of December 31, 2016, the Company’s property portfolio included 391 properties consisted of 146,610 residential sites. Its properties are designed for home options of various sizes and designs that are produced off-site by third-party manufacturers, installed and set on designated sites within the properties.

Essex Property Trust Company Profile

Essex Property Trust, Inc. is a self-administered and self-managed real estate investment trust. The Company is engaged primarily in the ownership, operation, management, acquisition, development and redevelopment of predominantly apartment communities, located along the West Coast. Its segments include Southern California, Northern California, Seattle Metro and Other real estate assets. The Company owns all of its interest in its real estate and other investments directly or indirectly through Essex Portfolio, L.P. (the Operating Partnership). Its properties include Mio, Form 15, Emerson Valley Village and Ashton Sherman Village. As of December 31, 2016, it owned or held an interest in 245 communities, aggregating 59,645 apartment homes, excluding its ownership in preferred equity investments, as well as two operating commercial buildings (totaling approximately 140,564 square feet), and six active development projects with 2,223 apartment homes in various stages of development.

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