Equity Residential (NYSE: EQR) and Associated Estates Realty (NYSE:AEC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Dividends

Equity Residential pays an annual dividend of $2.02 per share and has a dividend yield of 3.1%. Associated Estates Realty does not pay a dividend. Equity Residential pays out 90.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Associated Estates Realty has increased its dividend for 5 consecutive years.

Valuation & Earnings

This table compares Equity Residential and Associated Estates Realty’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Equity Residential $2.43 billion 9.91 $1.57 billion $2.23 29.39
Associated Estates Realty N/A N/A N/A N/A N/A

Equity Residential has higher revenue and earnings than Associated Estates Realty.

Profitability

This table compares Equity Residential and Associated Estates Realty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Equity Residential 33.99% 7.92% 3.97%
Associated Estates Realty 60.04% 18.10% 7.71%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Equity Residential and Associated Estates Realty, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Equity Residential 1 10 2 0 2.08
Associated Estates Realty 0 0 0 0 N/A

Equity Residential presently has a consensus price target of $67.75, suggesting a potential upside of 3.38%. Given Equity Residential’s higher probable upside, research analysts plainly believe Equity Residential is more favorable than Associated Estates Realty.

Insider and Institutional Ownership

91.0% of Equity Residential shares are held by institutional investors. 3.8% of Equity Residential shares are held 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.

Summary

Equity Residential beats Associated Estates Realty on 6 of the 11 factors compared between the two stocks.

Equity Residential Company Profile

Equity Residential is a real estate investment trust. The Company’s primary business is the acquisition, development and management of multifamily residential properties. Its segments include Boston, New York, Washington D.C., Southern California, San Francisco, Seattle and Other Markets. Southern California includes Los Angeles, San Diego and Orange County. Other Markets includes Phoenix. It is engaged in leasing of apartment units to residents. It focuses on rental apartment properties in urban and high-density suburban coastal gateway markets. As of December 31, 2016, the Company owned 302 properties located in 10 states and the District of Columbia consisting of 77,458 apartment units. The Company’s projects include The Alton, 455 Eye Street, 855 Brannan, Cascade, One Henry Adams, 340 Fremont and Vista 99. ERP Operating Limited Partnership (ERPOP) conducts the multifamily residential property business of Equity Residential.

Associated Estates Realty Company Profile

Associated Estates Realty Corporation is a self-administered and self-managed equity real estate investment trust (REIT). The Company is engaged primarily in the ownership and operation of multifamily apartment units. It specializes in multifamily ownership, operation, acquisition, development, disposition and property management activities. Its operating portfolio consists of approximately 49 apartment communities containing around 12,734 units in eight states that are owned, either directly or indirectly, through its subsidiaries. It also owns a commercial building in Los Angeles, California containing approximately 78,800 total square feet of office and commercial space. The Company also earns revenue from rental payments from the leasing of apartment units. It owns a taxable REIT subsidiary, which performs construction management services in connection with the development of multifamily properties that it owns, including consolidated and unconsolidated joint ventures.

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