Preferred Apartment Communities (NYSE: APTS) and Essex Property Trust (NYSE:ESS) are both financials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.
Risk and Volatility
Preferred Apartment Communities has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, Essex Property Trust has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Preferred Apartment Communities and Essex Property Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Preferred Apartment Communities||0||2||2||0||2.50|
|Essex Property Trust||2||7||9||0||2.39|
Preferred Apartment Communities currently has a consensus price target of $19.75, suggesting a potential upside of 0.20%. Essex Property Trust has a consensus price target of $269.87, suggesting a potential upside of 11.27%. Given Essex Property Trust’s higher possible upside, analysts plainly believe Essex Property Trust is more favorable than Preferred Apartment Communities.
Institutional and Insider Ownership
52.0% of Preferred Apartment Communities shares are owned by institutional investors. Comparatively, 97.1% of Essex Property Trust shares are owned by institutional investors. 3.1% of Preferred Apartment Communities shares are owned by insiders. Comparatively, 3.3% of Essex Property Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares Preferred Apartment Communities and Essex Property Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Preferred Apartment Communities||10.49%||2.78%||1.08%|
|Essex Property Trust||38.95%||8.19%||4.20%|
Valuation & Earnings
This table compares Preferred Apartment Communities and Essex Property Trust’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Preferred Apartment Communities||$200.12 million||3.61||-$9.53 million||($1.00)||-19.71|
|Essex Property Trust||$1.29 billion||12.38||$414.97 million||$7.99||30.36|
Essex Property Trust has higher revenue and earnings than Preferred Apartment Communities. Preferred Apartment Communities 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.
Preferred Apartment Communities pays an annual dividend of $1.00 per share and has a dividend yield of 5.1%. Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 2.9%. Preferred Apartment Communities pays out -100.0% 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. Preferred Apartment Communities has raised its dividend for 23 consecutive years and Essex Property Trust has raised its dividend for 2 consecutive years. Preferred Apartment Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Essex Property Trust beats Preferred Apartment Communities on 13 of the 17 factors compared between the two stocks.
Preferred Apartment Communities Company Profile
Preferred Apartment Communities, Inc. is a real estate investment trust (REIT). The Company is formed to acquire and operate multifamily properties in select targeted markets throughout the United States. It operates through segments, including multifamily communities, real estate related financing, new market properties and office buildings. The multifamily communities segment consists of its portfolio of owned residential multifamily communities. The real estate related financing segment consists of the Company’s portfolio of real estate loans, bridge loans, and other instruments deployed by it to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets. The new market properties segment consists of its portfolio of grocery-anchored shopping centers. The office buildings segment consists of its office buildings located in Atlanta, Georgia and Birmingham, Alabama and Texas.
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.
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