Essex Property Trust (NYSE: ESS) and Altisource Residential (NYSE:RESI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.
Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 3.0%. Altisource Residential pays an annual dividend of $0.60 per share and has a dividend yield of 5.6%. Essex Property Trust pays out 106.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Altisource Residential pays out -15.4% of its earnings in the form of a dividend. Essex Property Trust has increased its dividend for 4 consecutive years and Altisource Residential has increased its dividend for 24 consecutive years. Altisource Residential is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
96.6% of Essex Property Trust shares are owned by institutional investors. Comparatively, 69.6% of Altisource Residential shares are owned by institutional investors. 3.3% of Essex Property Trust shares are owned by company insiders. Comparatively, 0.5% of Altisource Residential shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Essex Property Trust and Altisource Residential’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Essex Property Trust||$1.36 billion||11.12||$433.05 million||$6.58||34.90|
|Altisource Residential||$56.76 million||10.13||-$228.02 million||($3.90)||-2.76|
Essex Property Trust has higher revenue and earnings than Altisource Residential. Altisource Residential is trading at a lower price-to-earnings ratio than Essex Property Trust, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Essex Property Trust has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500. Comparatively, Altisource Residential has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500.
This is a breakdown of current ratings and price targets for Essex Property Trust and Altisource Residential, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Essex Property Trust||1||7||11||0||2.53|
Essex Property Trust currently has a consensus target price of $263.53, suggesting a potential upside of 14.74%. Altisource Residential has a consensus target price of $15.57, suggesting a potential upside of 44.72%. Given Altisource Residential’s stronger consensus rating and higher possible upside, analysts clearly believe Altisource Residential is more favorable than Essex Property Trust.
This table compares Essex Property Trust and Altisource Residential’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Essex Property Trust||31.75%||6.76%||3.46%|
Essex Property Trust beats Altisource Residential on 11 of the 17 factors compared between the two stocks.
About Essex Property Trust
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.
About Altisource Residential
Altisource Residential Corporation is a real estate investment trust (REIT). The Company focuses on acquiring, owning and managing single-family rental (SFR) properties throughout the United States. The Company conducts its activities through its subsidiary, Altisource Residential, L.P., and its subsidiaries. The Company also converts a portion of the real estate owned (REO) properties that it acquires through resolution of its mortgage loans into SFR properties. The Company has also entered into property management service agreements with two third-party property managers: Altisource Portfolio Solutions, SA (ASPS) and Main Street Renewal, LLC (MSR), to provide, among other things, leasing and lease management, operations, maintenance, repair and property management services in respect of its SFR portfolios. As of December 31, 2016, the Company had 10,533 properties, consisting of 9,939 properties held for use and 594 held for sale.
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