Equity Residential Stock Hold Recommendation Reiterated (EQR)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Equity Residential (NYSE: EQR) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and feeble growth in the company's earnings per share.

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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 572.4% when compared to the same quarter one year prior, rising from $151.34 million to $1,017.69 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for EQUITY RESIDENTIAL is rather low; currently it is at 21.80%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 188.78% has significantly outperformed against the industry average.
  • The share price of EQUITY RESIDENTIAL has not done very well: it is down 9.51% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

Equity Residential, a real estate investment trust (REIT), engages in the acquisition, development, and management of multifamily properties in the United States. Equity has a market cap of $21.3 billion and is part of the financial sector and real estate industry. The company has a P/E ratio of 108.00, above the S&P 500 P/E ratio of 18.00. Shares are up 4.4% year to date as of the close of trading on Wednesday.

You can view the full Equity Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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