Essex Property Trust (NYSE: ESS) and Sun Communities (NYSE:SUI) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitabiliy, dividends, analyst recommendations, earnings, institutional ownership and risk.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Essex Property Trust and Sun Communities, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essex Property Trust 2 7 5 0 2.21
Sun Communities 0 2 3 0 2.60

Essex Property Trust currently has a consensus target price of $251.91, suggesting a potential downside of 5.70%. Sun Communities has a consensus target price of $87.80, suggesting a potential downside of 0.60%. Given Sun Communities’ stronger consensus rating and higher probable upside, analysts plainly believe Sun Communities is more favorable than Essex Property Trust.

Profitability

This table compares Essex Property Trust and Sun Communities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essex Property Trust 38.94% 8.04% 4.11%
Sun Communities 4.65% 1.80% 0.71%

Volatility and Risk

Essex Property Trust has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500. Comparatively, Sun Communities has a beta of 0.29, meaning that its stock price is 71% less volatile than the S&P 500.

Institutional & Insider Ownership

100.0% of Essex Property Trust shares are owned by institutional investors. Comparatively, 88.3% of Sun Communities shares are owned by institutional investors. 3.3% of Essex Property Trust shares are owned by insiders. Comparatively, 4.2% of Sun Communities shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Essex Property Trust and Sun Communities’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Essex Property Trust $1.35 billion 12.98 $916.44 million $7.80 34.25
Sun Communities $890.02 million 7.32 $405.80 million $0.42 210.31

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

Dividends

Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 2.6%. Sun Communities pays an annual dividend of $2.68 per share and has a dividend yield of 3.0%. Essex Property Trust pays out 89.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sun Communities pays out 638.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essex Property Trust has raised its dividend for 23 consecutive years.

Summary

Essex Property Trust beats Sun Communities on 13 of the 17 factors compared between the two stocks.

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.

Sun Communities Company Profile

Sun Communities, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company is a fully integrated real estate company, which, together with its affiliates and predecessors, has been in the business of acquiring, operating, developing, and expanding manufactured housing (MH) and recreational vehicle (RV). As of December 31, 2016, it owned and operated or had an interest in a portfolio of properties located throughout the United States and Ontario, Canada, including 226 MH communities, 87 RV communities, and 28 properties containing both MH and RV sites. The Company operates through two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, or has an interest in a portfolio, and develops MH communities and RV communities throughout the United States and is in the business of acquiring, operating, and expanding MH and RV communities.

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