Analyzing Essex Property Trust (ESS) & American Campus Communities (ACC)
Essex Property Trust (NYSE: ESS) and American Campus Communities (NYSE:ACC) are both mid-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.
Valuation and Earnings
This table compares Essex Property Trust and American Campus Communities’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Essex Property Trust||$1.37 billion||12.49||$932.45 million||$7.78||33.33|
|American Campus Communities||$772.33 million||7.71||$379.78 million||$0.49||89.02|
Essex Property Trust has higher revenue and earnings than American Campus Communities. Essex Property Trust is trading at a lower price-to-earnings ratio than American Campus Communities, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations and price targets for Essex Property Trust and American Campus Communities, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Essex Property Trust||2||9||7||0||2.28|
|American Campus Communities||0||3||5||0||2.63|
Essex Property Trust presently has a consensus price target of $266.79, suggesting a potential upside of 2.87%. American Campus Communities has a consensus price target of $53.67, suggesting a potential upside of 23.03%. Given American Campus Communities’ stronger consensus rating and higher probable upside, analysts clearly believe American Campus Communities is more favorable than Essex Property Trust.
Institutional and Insider Ownership
99.5% of Essex Property Trust shares are owned by institutional investors. 3.3% of Essex Property Trust shares are owned by insiders. Comparatively, 0.7% of American Campus Communities shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This table compares Essex Property Trust and American Campus Communities’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Essex Property Trust||38.33%||8.03%||4.11%|
|American Campus Communities||8.59%||1.90%||1.09%|
Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 2.7%. American Campus Communities pays an annual dividend of $1.76 per share and has a dividend yield of 4.0%. Essex Property Trust pays out 90.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Campus Communities pays out 359.2% 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 4 consecutive years and American Campus Communities has raised its dividend for 23 consecutive years. American Campus Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Essex Property Trust has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, American Campus Communities has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500.
Essex Property Trust beats American Campus 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.
American Campus Communities Company Profile
American Campus Communities, Inc. is a self-managed and self-administered equity real estate investment trust (REIT). The Company’s segments include Wholly-Owned Properties, On-Campus Participating Properties, Development Services, and Property Management Services. It is engaged in the acquisition, design, financing, development, construction management, leasing and management of student housing properties. The Wholly-Owned Properties segment consists of off-campus properties, which are located in close proximity to the school campus. The On-Campus Participating Properties segment includes on-campus properties that are operated under long-term ground/facility leases with three university systems. The Development Services segment consists of development and construction management services that it provides through one of its taxable REIT subsidiaries for third-party owners. The Property Management Services segment includes revenues generated from third-party management contracts.
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