Equity Residential (NYSE:EQR) and Mid-America Apartment Communities (NYSE:MAA) are both large-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.
Earnings & Valuation
This table compares Equity Residential and Mid-America Apartment Communities' 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 | 8.49 | $970.38 million | $3.49 | 17.65 |
| Mid-America Apartment Communities | $1.64 billion | 9.20 | $353.81 million | $6.55 | 20.15 |
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.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for Equity Residential and Mid-America Apartment Communities, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Equity Residential | 2 | 14 | 3 | 0 | 2.05 |
| Mid-America Apartment Communities | 0 | 3 | 3 | 0 | 2.50 |
Equity Residential presently has a consensus target price of $65.1765, suggesting a potential upside of 5.82%. Mid-America Apartment Communities has a consensus target price of $127.2222, suggesting a potential downside of 3.63%. Given Equity Residential's higher possible upside, equities analysts clearly believe Equity Residential is more favorable than Mid-America Apartment Communities.
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 | 35.97% | 8.89% | 4.56% |
| Mid-America Apartment Communities | 19.22% | 5.63% | 3.13% |
Insider and Institutional Ownership
85.6% of Equity Residential shares are owned by institutional investors. Comparatively, 91.4% of Mid-America Apartment Communities shares are owned by institutional investors. 2.3% of Equity Residential shares are owned by company insiders. Comparatively, 1.3% of Mid-America Apartment Communities shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Dividends
Equity Residential pays an annual dividend of $2.41 per share and has a dividend yield of 3.9%. Mid-America Apartment Communities pays an annual dividend of $4.00 per share and has a dividend yield of 3.0%. 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 3 consecutive years and Mid-America Apartment Communities has raised its dividend for 1 consecutive years. Equity Residential is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Equity Residential has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, Mid-America Apartment Communities has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.
Summary
Equity Residential beats Mid-America Apartment Communities on 10 of the 16 factors compared between the two stocks.
