Essex Property Trust (ESS) vs. Two Harbors Investments Corp (TWO) Head-To-Head Contrast
Essex Property Trust (NYSE: ESS) and Two Harbors Investments Corp (NYSE:TWO) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.
Institutional and Insider Ownership
99.5% of Essex Property Trust shares are owned by institutional investors. Comparatively, 70.2% of Two Harbors Investments Corp shares are owned by institutional investors. 3.3% of Essex Property Trust shares are owned by company insiders. Comparatively, 1.2% of Two Harbors Investments Corp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Essex Property Trust pays an annual dividend of $7.00 per share and has a dividend yield of 2.7%. Two Harbors Investments Corp pays an annual dividend of $1.04 per share and has a dividend yield of 10.3%. Essex Property Trust pays out 90.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investments Corp pays out 72.7% of its earnings in the form of a dividend. Two Harbors Investments Corp has raised its dividend for 23 consecutive years. Two Harbors Investments Corp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Essex Property Trust and Two Harbors Investments Corp’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Essex Property Trust||$1.37 billion||12.49||$932.45 million||$7.78||33.33|
|Two Harbors Investments Corp||$664.12 million||5.31||$499.03 million||$1.43||7.07|
Essex Property Trust has higher revenue and earnings than Two Harbors Investments Corp. Two Harbors Investments Corp 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.
Volatility & Risk
Essex Property Trust has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500. Comparatively, Two Harbors Investments Corp has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for Essex Property Trust and Two Harbors Investments Corp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Essex Property Trust||2||9||7||0||2.28|
|Two Harbors Investments Corp||0||2||3||0||2.60|
Essex Property Trust currently has a consensus price target of $266.79, suggesting a potential upside of 2.87%. Two Harbors Investments Corp has a consensus price target of $9.69, suggesting a potential downside of 4.18%. Given Essex Property Trust’s higher possible upside, analysts clearly believe Essex Property Trust is more favorable than Two Harbors Investments Corp.
This table compares Essex Property Trust and Two Harbors Investments Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Essex Property Trust||38.33%||8.03%||4.11%|
|Two Harbors Investments Corp||72.15%||10.26%||1.60%|
Essex Property Trust beats Two Harbors Investments Corp on 10 of the 17 factors compared between the two stocks.
About Essex Property Trust
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.
About Two Harbors Investments Corp
Two Harbors Investment Corp. is a real estate investment trust. The Company is focused on investing in, financing and managing residential mortgage-backed securities (RMBS), mortgage servicing rights (MSR), commercial real estate and other financial assets (collectively known as target assets). Its investment objective is to provide attractive risk-adjusted total return to its stockholders over the long-term, primarily through dividends and secondarily through capital appreciation. The Company focuses on managing various associated risks, including interest rate, prepayment, credit, mortgage spread and financing risk. The Company finances its RMBS and commercial real estate assets through short- and long-term borrowings structured as repurchase agreements and advances from the Federal Home Loan Bank of Des Moines, or the FHLB. It also finances its MSR through revolving credit facilities.
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