Financial Review: Mid-America Apartment Communities (MAA) & Equity Residential (EQR)

Mid-America Apartment Communities (NYSE: MAA) and Equity Residential (NYSE:EQR) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Insider & Institutional Ownership

91.8% of Mid-America Apartment Communities shares are held by institutional investors. Comparatively, 91.1% of Equity Residential shares are held by institutional investors. 1.3% of Mid-America Apartment Communities shares are held by company insiders. Comparatively, 3.8% of Equity Residential shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Mid-America Apartment Communities and Equity Residential’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mid-America Apartment Communities 15.80% 4.31% 2.38%
Equity Residential 33.99% 7.92% 3.97%

Analyst Recommendations

This is a summary of recent ratings and target prices for Mid-America Apartment Communities and Equity Residential, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mid-America Apartment Communities 0 1 9 0 2.90
Equity Residential 1 9 2 0 2.08

Mid-America Apartment Communities currently has a consensus target price of $109.90, suggesting a potential upside of 1.01%. Equity Residential has a consensus target price of $67.64, suggesting a potential upside of 1.75%. Given Equity Residential’s higher possible upside, analysts clearly believe Equity Residential is more favorable than Mid-America Apartment Communities.

Volatility and Risk

Mid-America Apartment Communities has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Equity Residential has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Dividends

Mid-America Apartment Communities pays an annual dividend of $3.48 per share and has a dividend yield of 3.2%. Equity Residential pays an annual dividend of $2.02 per share and has a dividend yield of 3.0%. Mid-America Apartment Communities pays out 148.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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. Mid-America Apartment Communities has increased its dividend for 6 consecutive years. Mid-America Apartment Communities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Mid-America Apartment Communities and Equity Residential’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Mid-America Apartment Communities $1.35 billion 9.16 $761.51 million $2.34 46.50
Equity Residential $2.43 billion 10.05 $1.57 billion $2.23 29.81

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.

Summary

Equity Residential beats Mid-America Apartment Communities on 10 of the 16 factors compared between the two stocks.

About Mid-America Apartment Communities

Mid-America Apartment Communities, Inc. is a multifamily focused, self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, acquires and develops apartment communities primarily located in the Southeast and Southwest regions of the United States. It operates through three segments: Large market same store, Secondary market same store and Non-Same Store and Other. Its Large market same store communities are communities in markets with a population of at least one million and at least 1% of the total public multifamily REIT units that it has owned. Its Secondary market same store communities are communities in markets with populations of more than one million but less than 1% of the total public multifamily REIT units or markets with populations of less than one million that it has owned. Its Non-same store communities and other includes recent acquisitions and communities in development or lease-up communities.

About Equity Residential

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.

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