Head-To-Head Review: Independence Realty Trust (IRT) versus Equity Residential (EQR)

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

Dividends

Independence Realty Trust pays an annual dividend of $0.72 per share and has a dividend yield of 7.1%. Equity Residential pays an annual dividend of $2.02 per share and has a dividend yield of 3.0%. Independence Realty Trust pays out -276.9% 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. Independence Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Independence Realty Trust has a beta of 1.07, indicating that its stock price is 7% more 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.

Insider and Institutional Ownership

61.9% of Independence Realty Trust shares are held by institutional investors. Comparatively, 90.9% of Equity Residential shares are held by institutional investors. 0.6% of Independence Realty Trust shares are held by insiders. Comparatively, 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 is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Independence Realty Trust -10.91% -3.08% -1.28%
Equity Residential 30.88% 7.22% 3.66%

Earnings and Valuation

This table compares Independence Realty Trust and Equity Residential’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Independence Realty Trust N/A N/A N/A ($0.26) -39.04
Equity Residential $2.43 billion 10.17 $1.57 billion $2.04 32.97

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

Analyst Recommendations

This is a summary of current recommendations for Independence Realty Trust and Equity Residential, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independence Realty Trust 0 0 5 0 3.00
Equity Residential 1 8 3 0 2.17

Independence Realty Trust presently has a consensus price target of $10.80, indicating a potential upside of 6.40%. Equity Residential has a consensus price target of $68.45, indicating a potential upside of 1.78%. Given Independence Realty Trust’s stronger consensus rating and higher possible upside, research analysts clearly believe Independence Realty Trust is more favorable than Equity Residential.

Summary

Equity Residential beats Independence Realty Trust on 8 of the 14 factors compared between the two stocks.

About Independence Realty Trust

Independence Realty Trust, Inc. is an internally-managed real estate investment trust (REIT). The Company is engaged in the business of owning, managing, operating, leasing, acquiring, developing, investing in, and disposing of real estate assets. The Company owns apartment properties in geographic non-gateway markets. As of September 26, 2017, the Company owns and operates 55 multifamily apartment properties, totaling 15,165 units. Its properties include Copper Mill, Crestmont, Heritage Trace, Runaway Bay, Berkshire Square, The Crossings, Reserve at Eagle Ridge, Windrush, Heritage Park, Raindance, Augusta, Invitational, Carrington Park, Walnut Hill, Lenoxplace, Bennington Pond, Jamestown, Meadows, Oxmoor, Bayview Club, Arbors River Oaks, Fox Trails, Bridge Pointe, The Aventine Greenville and Westmont Commons.

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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