Head-To-Head Analysis: Equity Residential (NYSE:EQR) and Safehold (NYSE:SAFE)

Equity Residential (NYSE:EQR) and Safehold (NYSE:SAFE) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Valuation and Earnings

This table compares Equity Residential and Safehold”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equity Residential	$3.09 billion	7.85	$1.12 billion	$2.93	21.78
Safehold	$385.55 million	2.91	$105.76 million	$1.60	9.79

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

Dividends

Equity Residential pays an annual dividend of $2.77 per share and has a dividend yield of 4.3%. Safehold pays an annual dividend of $0.71 per share and has a dividend yield of 4.5%. Equity Residential pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safehold pays out 44.4% of its earnings in the form of a dividend. Equity Residential has increased its dividend for 4 consecutive years and Safehold has increased its dividend for 1 consecutive years. Safehold is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Equity Residential	36.20%	9.98%	5.37%
Safehold	29.69%	4.92%	1.67%

Risk & Volatility

Equity Residential has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Safehold has a beta of 1.86, meaning that its stock price is 86% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Equity Residential and Safehold, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equity Residential	0	13	7	0	2.35
Safehold	1	6	4	1	2.42

Equity Residential presently has a consensus target price of $69.68, suggesting a potential upside of 9.20%. Safehold has a consensus target price of $19.00, suggesting a potential upside of 21.33%. Given Safehold’s stronger consensus rating and higher probable upside, analysts clearly believe Safehold is more favorable than Equity Residential.

Insider & Institutional Ownership

92.7% of Equity Residential shares are owned by institutional investors. Comparatively, 70.4% of Safehold shares are owned by institutional investors. 1.1% of Equity Residential shares are owned by insiders. Comparatively, 3.5% of Safehold shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Equity Residential beats Safehold on 11 of the 18 factors compared between the two stocks.

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 305 properties consisting of 80,683 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin.

About Safehold

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders.