Equity Residential (NYSE:EQR) and Mid-America Apartment Communities (NYSE:MAA) are both large-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.
Dividends
Equity Residential pays an annual dividend of $2.41 per share and has a dividend yield of 4.0%. Mid-America Apartment Communities pays an annual dividend of $4.00 per share and has a dividend yield of 3.4%. Equity Residential pays out 69.1% of its earnings in the form of a dividend. Mid-America Apartment Communities pays out 61.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Equity Residential has raised its dividend for 2 consecutive years and Mid-America Apartment Communities has raised its dividend for 9 consecutive years.
Analyst Ratings
This is a summary of recent recommendations for Equity Residential and Mid-America Apartment Communities, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Equity Residential | 4 | 12 | 1 | 0 | 1.82 |
| Mid-America Apartment Communities | 0 | 5 | 6 | 0 | 2.55 |
Equity Residential currently has a consensus price target of $71.50, indicating a potential upside of 19.99%. Mid-America Apartment Communities has a consensus price target of $133.00, indicating a potential upside of 14.62%. Given Equity Residential's higher probable upside, analysts clearly believe Equity Residential is more favorable than Mid-America Apartment Communities.
Insider & Institutional Ownership
88.3% of Equity Residential shares are held by institutional investors. Comparatively, 92.2% of Mid-America Apartment Communities shares are held by institutional investors. 2.3% of Equity Residential shares are held by insiders. Comparatively, 1.3% of Mid-America Apartment Communities shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Profitability
This table compares Equity Residential and Mid-America Apartment Communities' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Equity Residential | 43.16% | 11.20% | 5.58% |
| Mid-America Apartment Communities | 19.66% | 5.33% | 2.97% |
Volatility and Risk
Equity Residential has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Mid-America Apartment Communities has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.
Earnings & Valuation
This table compares Equity Residential and Mid-America Apartment Communities' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Equity Residential | $2.70 billion | 8.21 | $970.38 million | $3.49 | 17.07 |
| Mid-America Apartment Communities | $1.64 billion | 8.09 | $353.81 million | $6.55 | 17.72 |
Equity Residential has higher revenue and earnings than Mid-America Apartment Communities. Equity Residential is trading at a lower price-to-earnings ratio than Mid-America Apartment Communities, indicating that it is currently the more affordable of the two stocks.
Summary
Equity Residential beats Mid-America Apartment Communities on 9 of the 17 factors compared between the two stocks.
