Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Is It Wise To Hold Essex Property (ESS) Stock Right Now?

By Zacks Investment ResearchStock MarketsApr 01, 2019 08:36AM ET
www.investing.com/analysis/is-it-wise-to-hold-essex-property-ess-stock-right-now-200402669
Is It Wise To Hold Essex Property (ESS) Stock Right Now?
By Zacks Investment Research   |  Apr 01, 2019 08:36AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Essex Property’s (NYSE:ESS) is well poised to ride on growth curve, backed by its solid West Coast property base and favorable demographic conditions. However, high apartment deliveries in a number of its markets and significant concentration of assets are concerns for the company.

Particularly, Essex Property’s substantial exposure to the West Coast market offers ample scope to boost its top line, over the long term. There are several innovation and technology companies in this region. Notably, the region has been witnessing impressive job growth, higher wages, increased percentage of renters than owners and favorable migration trends, with the influx of workers to its markets, primarily from the major East Coast markets. Moreover, due to high cost of homeownership, transition from renter to homeowner is difficult in its markets, which favorably impacts rental housing demand.

In addition, demographic growth continues to be solid in the young-adult age cohort, which has a higher propensity to rent. This age cohort also experiences a considerable part of the net job growth and provides a significant source of pent-up demand. Further, the company can quickly adjust to rate hikes as it leases its properties on a short-term basis.

Essex Property also maintains a solid balance sheet and enjoys financial flexibility. It exited 2018 with cash and cash equivalents, including restricted cash, of $151.4 million, up from $61.1 million recorded at the end of 2017. Additionally, as of Jan 28, 2019, the company had around $1.2 billion in undrawn capacity on its unsecured credit facilities. Also, the company’s ROE of 5.74% compares favorably with ROE of 3.41% for the industry, highlighting that it is more efficient in using shareholders’ funds compared to its peers. This healthy financial position is likely to help the company strengthen and expand its business.

Furthermore, solid dividend payouts are arguably the biggest attraction for REIT investors and Essex Property has been steadily raising its payout. In fact, this February, the company announced a 4.8% hike in its quarterly dividend. This marked the company’s 25th consecutive annual dividend increase. This also means Essex Property qualifies to become a “Dividend Aristocrat”.

Also, on Jan 30, Essex Property reported fourth-quarter 2018 core fund from operation (FFO) per share of $3.19, in line the Zacks Consensus Estimate. Core FFO per share improved 6% from the year-ago quarter figure of $3.01. Results reflect growth in same-property net operating income (NOI). Improving economic environment and job growth helped spur housing demand in the Oct-Dec quarter.

Nonetheless, apartment deliveries are anticipated to remain elevated in a number of the company’s markets in the near term. This high supply is a concern because it curtails landlords’ ability to command more rent and result in lesser absorption. Further, it results in aggressive rental concessions and moderate pricing power of the company.

Moreover, Essex Property’s assets are concentrated in Southern (NYSE:SO) California, Northern California, and the Seattle metropolitan area. In fact, 83% of the company’s rental revenues were generated from communities located in California for the year ended Dec 31, 2018. This makes the company’s operating results and financial conditions susceptible to any unfavorable fluctuations in local markets.

Shares of Essex Property Trust have outperformed its industry in the past six months. Its shares have gained 19.5% in the past six months compared to the industry’s rise of 13.3%.




Currently, Essex Property has a Zacks Rank #3 (Hold).

Stocks to Consider

Government Properties Income Trust’s (NASDAQ:OPI) shares have gained 3.5%, over the past three months. At present, the stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hunt Companies Finance Trust, Inc.’s (NYSE:HCFT) shares have increased 19.9%, in three months’ time. The stock currently sports a Zacks Rank of 1.

Equity Lifestyle Properties, Inc’s (NYSE:ELS) shares have gained 22.2%, in the past three months. Currently, the stock carries a Zacks Rank #2 (Buy).

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>



Essex Property Trust, Inc. (ESS): Free Stock Analysis Report

Equity Lifestyle Properties, Inc. (ELS): Free Stock Analysis Report

HUNT COMPANIES FINANCE TRUST, INC. (HCFT): Free Stock Analysis Report

Government Properties Income Trust (OPI): Free Stock Analysis Report

Original post

Zacks Investment Research
Is It Wise To Hold Essex Property (ESS) Stock Right Now?
 

Related Articles

Is It Wise To Hold Essex Property (ESS) Stock Right Now?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email