Rating Change #6
Essex Property Trust (ESS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 168.8% when compared to the same quarter one year prior, rising from $8.96 million to $24.09 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 17.8%. Since the same quarter one year prior, revenues rose by 12.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $72.16 million or 25.91% when compared to the same quarter last year. In addition, ESSEX PROPERTY TRUST has also modestly surpassed the industry average cash flow growth rate of 25.40%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- ESSEX PROPERTY TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ESSEX PROPERTY TRUST reported lower earnings of $1.01 versus $1.14 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.01).
Essex Property Trust, Inc. is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It primarily engages in acquiring, developing, redeveloping, and managing multifamily apartment communities. The company has a P/E ratio of 127.6, above the average real estate industry P/E ratio of 90.2 and above the S&P 500 P/E ratio of 17.7. Essex Property has a market cap of $5.21 billion and is part of the financial sector and real estate industry. Shares are up 4.6% year to date as of the close of trading on Tuesday.You can view the full Essex Property Ratings Report or get investment ideas from our investment research center.