With a market cap of $26.4 billion, Chicago, Illinois-based Equity Residential (EQR) is a leading publicly traded real estate investment trust (REIT), specializing in high-quality apartment properties across the United States. With a strong presence in dynamic cities like Boston, New York, Washington, D.C., Seattle, San Francisco, and Southern California, the company is also expanding into Denver, Atlanta, and Austin.
Companies valued at $10 billion or more are generally described as “large-cap” stocks and Equity Residential fits right into that category. Focused on creating thriving communities, Equity Residential emphasizes the acquisition, development, and management of residential properties that attract affluent long-term renters. Its impressive portfolio includes 312 properties with over 84,000 apartment units, underscoring its commitment to excellence in the multifamily housing market.
Shares of EQR are trading 11.9% below their 52-week high of $78.83, reached on Sep. 16. The REIT has decreased 9.8% over the past three months, underperforming the broader Dow Jones Industrials Average’s ($DOWI) marginal return over the same time frame.
However, in the longer term, EQR stock is up 13.6% on a YTD basis, surpassing DOWI’s 12.3% gains. In addition, EQR’s 13% gain over the past 52 weeks, compared to DOWI’s 12.7% returns over the same time frame.
Equity Residential has consistently traded above its 200-day moving average since mid-April. While the stock has also remained above its 50-day moving average during this period, it has experienced fluctuations over the past few months.
Shares of EQR fell 4.8% following its Q3 earnings release on Oct. 30 due to multiple concerns. While the company reported in-line normalized FFO per share of $0.98 and modest rental income growth of 3.4% year-over-year to $748.3 million, its blended lease rate growth dropped to 2%, signaling a deceleration in pricing power. Additionally, higher same-store expense growth relative to revenue growth and a slight sequential decline in weighted average occupancy added pressure on investor sentiment. The increased net debt-to-normalized EBITDAre ratio also heightened concerns about rising leverage levels amid a tightening financial environment.
EQR has underperformed its rival, Essex Property Trust, Inc. (ESS), which gained 13.5% over the past 52 weeks. But, Equity Residential has outperformed ESS’ 12.5% YTD return.
Despite EQR’s outperformance relative to the broader market over the past year, analysts remain cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 27 analysts covering the stock, and as of writing, the stock is trading below its mean price target of $78.70.
