American Homes 4 Rent (NYSE: AMH) and Essex Property Trust (NYSE:ESS) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.
This is a breakdown of current ratings and recommmendations for American Homes 4 Rent and Essex Property Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Homes 4 Rent||0||1||8||0||2.89|
|Essex Property Trust||3||7||9||0||2.32|
This table compares American Homes 4 Rent and Essex Property Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Homes 4 Rent||6.56%||1.15%||0.75%|
|Essex Property Trust||38.95%||8.19%||4.20%|
Institutional & Insider Ownership
88.2% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 97.2% of Essex Property Trust shares are held by institutional investors. 27.8% of American Homes 4 Rent shares are held by insiders. Comparatively, 3.3% of Essex Property Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
American Homes 4 Rent pays an annual dividend of $0.20 per share and has a dividend yield of 1.0%. Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 3.1%. American Homes 4 Rent pays out -2,000.0% of its earnings in the form of a dividend. Essex Property Trust pays out 87.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essex Property Trust has increased its dividend for 24 consecutive years. Essex Property Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares American Homes 4 Rent and Essex Property Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Homes 4 Rent||$878.89 million||6.66||$6.69 million||($0.01)||-2,041.00|
|Essex Property Trust||$1.29 billion||11.41||$414.97 million||$7.99||27.99|
Essex Property Trust has higher revenue and earnings than American Homes 4 Rent. American Homes 4 Rent 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
American Homes 4 Rent has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Essex Property Trust has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.
Essex Property Trust beats American Homes 4 Rent on 12 of the 17 factors compared between the two stocks.
American Homes 4 Rent Company Profile
American Homes 4 Rent is an internally managed real estate investment trust (REIT) focused on acquiring, renovating, leasing and operating single-family homes as rental properties. The Company’s primary objective is to generate attractive risk-adjusted returns for its shareholders through dividends and capital appreciation by acquiring, renovating, leasing and operating single-family homes as rental properties. As of December 31, 2016, it owned 48,422 single-family properties in 22 states, including 1,119 properties held for sale, and had an additional 47 properties in escrow that it intended to acquire. Its integrated operating platform offers property management, acquisitions, construction, marketing, leasing, financial and administrative functions. The Company may seek to invest in condominium units, townhouses and real estate-related debt investments. The Company is externally managed and advised by American Homes 4 Rent Advisor, LLC (the Advisor).
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.
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