American Homes 4 Rent (NYSE:AMH) versus Essex Property Trust (ESS) Head-To-Head Survey

Essex Property Trust (NYSE: ESS) and American Homes 4 Rent (NYSE:AMH) are both financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Essex Property Trust and American Homes 4 Rent, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essex Property Trust 1 7 11 0 2.53
American Homes 4 Rent 0 1 8 0 2.89

Essex Property Trust presently has a consensus price target of $263.53, suggesting a potential upside of 17.25%. American Homes 4 Rent has a consensus price target of $25.22, suggesting a potential upside of 31.50%. Given American Homes 4 Rent’s stronger consensus rating and higher possible upside, analysts clearly believe American Homes 4 Rent is more favorable than Essex Property Trust.

Valuation and Earnings

This table compares Essex Property Trust and American Homes 4 Rent’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essex Property Trust $1.36 billion 10.88 $433.05 million $6.57 34.21
American Homes 4 Rent $878.89 million 6.26 $6.69 million $0.01 1,918.00

Essex Property Trust has higher revenue and earnings than American Homes 4 Rent. Essex Property Trust is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Essex Property Trust has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500. Comparatively, American Homes 4 Rent has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Dividends

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 an annual dividend of $0.20 per share and has a dividend yield of 1.0%. Essex Property Trust pays out 106.5% 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 Homes 4 Rent pays out 2,000.0% 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 Homes 4 Rent has increased its dividend for 24 consecutive years. Essex Property Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

96.3% of Essex Property Trust shares are held by institutional investors. Comparatively, 88.2% of American Homes 4 Rent shares are held by institutional investors. 3.3% of Essex Property Trust shares are held by company insiders. Comparatively, 27.8% of American Homes 4 Rent shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Essex Property Trust and American Homes 4 Rent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essex Property Trust 31.75% 6.76% 3.46%
American Homes 4 Rent 6.56% 1.15% 0.75%

Summary

Essex Property Trust beats American Homes 4 Rent on 11 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 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).

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