Equity Residential (NYSE: EQR) and Colony Starwood Homes (NYSE:SFR) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Equity Residential and Colony Starwood Homes, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity Residential 1 9 2 0 2.08
Colony Starwood Homes 0 5 5 0 2.50

Equity Residential presently has a consensus target price of $67.91, indicating a potential upside of 1.86%. Colony Starwood Homes has a consensus target price of $36.90, indicating a potential upside of 1.04%. Given Equity Residential’s higher probable upside, research analysts plainly believe Equity Residential is more favorable than Colony Starwood Homes.

Earnings and Valuation

This table compares Equity Residential and Colony Starwood Homes’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Equity Residential $2.43 billion 10.08 $1.57 billion $2.23 29.90
Colony Starwood Homes $599.75 million 6.18 $315.66 million ($0.33) -110.67

Equity Residential has higher revenue and earnings than Colony Starwood Homes. Colony Starwood Homes is trading at a lower price-to-earnings ratio than Equity Residential, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Equity Residential and Colony Starwood Homes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity Residential 33.99% 7.92% 3.97%
Colony Starwood Homes -5.65% -0.81% -0.34%

Insider & Institutional Ownership

91.0% of Equity Residential shares are held by institutional investors. 3.8% of Equity Residential shares are held by company insiders. Comparatively, 5.0% of Colony Starwood Homes shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Equity Residential pays an annual dividend of $2.02 per share and has a dividend yield of 3.0%. Colony Starwood Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. Equity Residential pays out 90.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Colony Starwood Homes pays out -266.7% of its earnings in the form of a dividend.

Risk & Volatility

Equity Residential has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Colony Starwood Homes has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500.

Summary

Equity Residential beats Colony Starwood Homes on 11 of the 16 factors compared between the two stocks.

About Equity Residential

Equity Residential is a real estate investment trust. The Company’s primary business is the acquisition, development and management of multifamily residential properties. Its segments include Boston, New York, Washington D.C., Southern California, San Francisco, Seattle and Other Markets. Southern California includes Los Angeles, San Diego and Orange County. Other Markets includes Phoenix. It is engaged in leasing of apartment units to residents. It focuses on rental apartment properties in urban and high-density suburban coastal gateway markets. As of December 31, 2016, the Company owned 302 properties located in 10 states and the District of Columbia consisting of 77,458 apartment units. The Company’s projects include The Alton, 455 Eye Street, 855 Brannan, Cascade, One Henry Adams, 340 Fremont and Vista 99. ERP Operating Limited Partnership (ERPOP) conducts the multifamily residential property business of Equity Residential.

About Colony Starwood Homes

Starwood Waypoint Homes, formerly Colony Starwood Homes, is an internally managed real estate investment trust (REIT). The Company was formed primarily to acquire, renovate, lease and manage residential assets in select markets across the United States. It is focused on acquiring single-family rental (SFR) homes through a variety of channels, renovating these homes to the extent necessary and leasing them to qualified residents. The Company operates through two segments, which are represented by its portfolio of SFR homes and its portfolio of NPLs owned in the joint venture with Prime Asset Fund VI, LLC (Prime). The Company identifies and pursues individual home acquisition opportunities through various sources, including multiple listing services (MLS) listings, foreclosure auctions and short sales. As of December 31, 2016, its SFR portfolio consisted of 31,684 owned homes, including 31,065 rental homes and 619 homes that it does not intend to hold for the long term.

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