Armada Hoffler Properties (NYSE:AHH) and Essex Property Trust (NYSE:ESS) Critical Contrast

Essex Property Trust (NYSE:ESS) and Armada Hoffler Properties (NYSE:AHH) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.

Dividends

Essex Property Trust pays an annual dividend of $10.28 per share and has a dividend yield of 4.0%. Armada Hoffler Properties pays an annual dividend of $0.56 per share and has a dividend yield of 7.9%. Essex Property Trust pays out 78.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Armada Hoffler Properties pays out 294.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essex Property Trust has raised its dividend for 31 consecutive years.

Volatility and Risk

Essex Property Trust has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, Armada Hoffler Properties has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Valuation & Earnings

This table compares Essex Property Trust and Armada Hoffler Properties”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Essex Property Trust	$1.77 billion	9.27	$741.52 million	$13.16	19.40
Armada Hoffler Properties	$708.47 million	1.03	$35.65 million	$0.19	37.13

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

Profitability

This table compares Essex Property Trust and Armada Hoffler Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Essex Property Trust	45.46%	14.68%	6.46%
Armada Hoffler Properties	6.77%	4.43%	1.22%

Analyst Ratings

This is a summary of current recommendations and price targets for Essex Property Trust and Armada Hoffler Properties, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Essex Property Trust	1	13	7	0	2.29
Armada Hoffler Properties	2	1	1	1	2.20

Essex Property Trust currently has a consensus target price of $290.38, suggesting a potential upside of 13.72%. Armada Hoffler Properties has a consensus target price of $8.13, suggesting a potential upside of 15.17%. Given Armada Hoffler Properties’ higher possible upside, analysts clearly believe Armada Hoffler Properties is more favorable than Essex Property Trust.

Institutional & Insider Ownership

96.5% of Essex Property Trust shares are held by institutional investors. Comparatively, 66.4% of Armada Hoffler Properties shares are held by institutional investors. 3.5% of Essex Property Trust shares are held by company insiders. Comparatively, 11.9% of Armada Hoffler Properties shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Essex Property Trust beats Armada Hoffler Properties on 12 of the 18 factors compared between the two stocks.

About Essex Property Trust

Essex Property Trust, Inc., an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 252 apartment communities comprising approximately 62,000 apartment homes with an additional property in active development.

About Armada Hoffler Properties

Armada Hoffler Properties, Inc. (the “Company”) is a vertically integrated, self-managed real estate investment trust (“REIT”) with over four decades of experience developing, building, acquiring, and managing high-quality retail, office, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to the ownership of the Company’s operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners and also invests in development projects through real estate financing arrangements. The Company also provides general construction and development services to third-party clients. The Company’s construction and development experience includes mid- and high-rise office buildings, retail strip malls, retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical, and special purpose facilities, government projects, parking garages, and mixed-use town centers. The Company is the sole general partner of Armada Hoffler, L.P. (the “Operating Partnership”) and, as of March 31, 2024, owned 75.5% of the economic interest in the Operating Partnership, of which 0.1% is held as general partnership units. The operations of the Company are conducted primarily through the Operating Partnership and the wholly owned subsidiaries thereof.