Head-To-Head Analysis: Colony Starwood Homes (SFR) vs. Equity Residential (EQR)

Colony Starwood Homes (NYSE: SFR) and Equity Residential (NYSE:EQR) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, dividends, valuation, earnings, profitability and analyst recommendations.

Dividends

Colony Starwood Homes pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. Equity Residential pays an annual dividend of $2.02 per share and has a dividend yield of 3.0%. Colony Starwood Homes pays out -266.7% of its earnings in the form of a dividend. Equity Residential pays out 99.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Colony Starwood Homes and Equity Residential’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Colony Starwood Homes $599.75 million 6.15 $315.66 million ($0.33) -110.03
Equity Residential $2.43 billion 10.17 $1.57 billion $2.04 32.97

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

Insider and Institutional Ownership

90.9% of Equity Residential shares are owned by institutional investors. 5.0% of Colony Starwood Homes shares are owned by company insiders. Comparatively, 3.8% of Equity Residential shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Colony Starwood Homes and Equity Residential’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Colony Starwood Homes -5.65% -0.81% -0.34%
Equity Residential 30.88% 7.22% 3.66%

Analyst Ratings

This is a breakdown of current ratings for Colony Starwood Homes and Equity Residential, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Colony Starwood Homes 0 5 5 0 2.50
Equity Residential 1 9 3 0 2.15

Colony Starwood Homes presently has a consensus price target of $36.90, suggesting a potential upside of 1.62%. Equity Residential has a consensus price target of $67.92, suggesting a potential upside of 0.98%. Given Colony Starwood Homes’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Colony Starwood Homes is more favorable than Equity Residential.

Volatility and Risk

Colony Starwood Homes has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Equity Residential has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500.

Summary

Equity Residential beats Colony Starwood Homes on 9 of the 15 factors compared between the two stocks.

Colony Starwood Homes Company Profile

Starwood Waypoint Homes, formerly Colony Starwood Homes, is an internally managed real estate investment trust (REIT). The Company was formed primarily to acquire, renovate, lease and manage residential assets in select markets across the United States. It is focused on acquiring single-family rental (SFR) homes through a variety of channels, renovating these homes to the extent necessary and leasing them to qualified residents. The Company operates through two segments, which are represented by its portfolio of SFR homes and its portfolio of NPLs owned in the joint venture with Prime Asset Fund VI, LLC (Prime). The Company identifies and pursues individual home acquisition opportunities through various sources, including multiple listing services (MLS) listings, foreclosure auctions and short sales. As of December 31, 2016, its SFR portfolio consisted of 31,684 owned homes, including 31,065 rental homes and 619 homes that it does not intend to hold for the long term.

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.

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