Starwood Waypoint Homes (NYSE: SFR) and Essex Property Trust (NYSE:ESS) are both mid-cap residential reits companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, profitability, risk, analyst recommendations and dividends.
Insider and Institutional Ownership
97.2% of Essex Property Trust shares are held by institutional investors. 5.0% of Starwood Waypoint Homes 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, endowments and large money managers believe a stock is poised for long-term growth.
This is a summary of current ratings for Starwood Waypoint Homes and Essex Property Trust, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Starwood Waypoint Homes||0||4||6||0||2.60|
|Essex Property Trust||3||7||9||0||2.32|
Starwood Waypoint Homes currently has a consensus target price of $37.50, suggesting a potential upside of 1.00%. Essex Property Trust has a consensus target price of $264.50, suggesting a potential upside of 18.28%. Given Essex Property Trust’s higher possible upside, analysts plainly believe Essex Property Trust is more favorable than Starwood Waypoint Homes.
This table compares Starwood Waypoint Homes and Essex Property Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Starwood Waypoint Homes||-13.10%||-2.63%||-1.19%|
|Essex Property Trust||38.95%||8.19%||4.20%|
Risk and Volatility
Starwood Waypoint Homes has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, Essex Property Trust has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.
Starwood Waypoint Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 3.1%. Starwood Waypoint Homes pays out -314.3% 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. Starwood Waypoint Homes has increased its dividend for 24 consecutive years.
Earnings & Valuation
This table compares Starwood Waypoint Homes and Essex Property Trust’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Starwood Waypoint Homes||$575.68 million||8.28||-$81.26 million||($0.28)||-132.61|
|Essex Property Trust||$1.29 billion||11.41||$414.97 million||$7.99||27.99|
Essex Property Trust has higher revenue and earnings than Starwood Waypoint Homes. Starwood Waypoint Homes 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.
Essex Property Trust beats Starwood Waypoint Homes on 12 of the 17 factors compared between the two stocks.
About Starwood Waypoint 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.
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.
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