Financial Review: Equity Residential (NYSE:EQR) and Invitation Home (NYSE:INVH)

Invitation Home (NYSE:INVH) and Equity Residential (NYSE:EQR) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Dividends

Invitation Home pays an annual dividend of $1.20 per share and has a dividend yield of 4.0%. Equity Residential pays an annual dividend of $2.81 per share and has a dividend yield of 4.1%. Invitation Home pays out 126.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Equity Residential pays out 112.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Invitation Home has raised its dividend for 1 consecutive years and Equity Residential has raised its dividend for 4 consecutive years. Equity Residential is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

96.8% of Invitation Home shares are held by institutional investors. Comparatively, 92.7% of Equity Residential shares are held by institutional investors. 0.3% of Invitation Home shares are held by company insiders. Comparatively, 1.2% of Equity Residential shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Invitation Home and Equity Residential, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Invitation Home	1	10	10	0	2.43
Equity Residential	0	13	9	1	2.48

Invitation Home presently has a consensus target price of $32.11, suggesting a potential upside of 5.78%. Equity Residential has a consensus target price of $70.65, suggesting a potential upside of 2.99%. Given Invitation Home’s higher possible upside, equities analysts clearly believe Invitation Home is more favorable than Equity Residential.

Earnings and Valuation

This table compares Invitation Home and Equity Residential”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Invitation Home	$2.73 billion	6.61	$587.92 million	$0.95	31.95
Equity Residential	$3.09 billion	8.31	$1.12 billion	$2.50	27.44

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

Risk & Volatility

Invitation Home has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500. Comparatively, Equity Residential has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Invitation Home	20.88%	6.29%	3.20%
Equity Residential	30.63%	8.57%	4.58%

Summary

Equity Residential beats Invitation Home on 13 of the 18 factors compared between the two stocks.

About Invitation Home

Invitation Homes, an S&P 500 company, is the nation's premier single-family home leasing and management company, meeting changing lifestyle demands by providing access to high-quality, updated homes with valued features such as close proximity to jobs and access to good schools. The company's mission, Together with you, we make a house a home, reflects its commitment to providing homes where individuals and families can thrive and high-touch service that continuously enhances residents' living experiences.

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.