Head to Head Review: Equity Residential (NYSE:EQR) versus Sun Communities (NYSE:SUI)

Sun Communities (NYSE:SUI) and Equity Residential (NYSE:EQR) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Institutional and Insider Ownership

99.6% of Sun Communities shares are held by institutional investors. Comparatively, 92.7% of Equity Residential shares are held by institutional investors. 1.8% of Sun Communities shares are held by company insiders. Comparatively, 1.1% of Equity Residential shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Sun Communities and Equity Residential”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sun Communities	$3.22 billion	4.74	$101.80 million	$7.98	15.46
Equity Residential	$2.98 billion	7.89	$1.04 billion	$3.03	20.39

Equity Residential has lower revenue, but higher earnings than Sun Communities. Sun Communities is trading at a lower price-to-earnings ratio than Equity Residential, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Sun Communities has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Equity Residential has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Profitability

This table compares Sun Communities and Equity Residential’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sun Communities	42.58%	-4.53%	-2.29%
Equity Residential	37.58%	10.30%	5.54%

Dividends

Sun Communities pays an annual dividend of $4.16 per share and has a dividend yield of 3.4%. Equity Residential pays an annual dividend of $2.77 per share and has a dividend yield of 4.5%. Sun Communities pays out 52.1% of its earnings in the form of a dividend. Equity Residential pays out 91.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sun Communities has raised its dividend for 8 consecutive years and Equity Residential has raised its dividend for 4 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sun Communities and Equity Residential, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sun Communities	1	7	6	0	2.36
Equity Residential	0	12	7	0	2.37

Sun Communities presently has a consensus target price of $137.46, suggesting a potential upside of 11.40%. Equity Residential has a consensus target price of $70.01, suggesting a potential upside of 13.31%. Given Equity Residential’s stronger consensus rating and higher possible upside, analysts plainly believe Equity Residential is more favorable than Sun Communities.

Summary

Equity Residential beats Sun Communities on 9 of the 17 factors compared between the two stocks.

About Sun Communities

Established in 1975, Sun Communities, Inc. became a publicly owned corporation in December 1993. The Company is a fully integrated REIT listed on the New York Stock Exchange under the symbol: SUI. As of December 31, 2023, the Company owned, operated, or had an interest in a portfolio of 667 developed MH, RV and Marina properties comprising 179,310 developed sites and approximately 48,030 wet slips and dry storage spaces in the U.S., the UK and Canada.

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 305 properties consisting of 80,683 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin.