Equity Commonwealth (EQC) AI Stock Analysis

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Equity Commonwealth

(NYSE:EQC)

56Neutral

Equity Commonwealth's overall score reflects its strong financial stability and effective wind-down management, but is tempered by weak technical indicators and challenges in consistent revenue generation. The low P/E ratio suggests potential undervaluation, while the transition to a liquidating trust significantly impacts the company's future as a public entity.

Equity Commonwealth (EQC) vs. S&P 500 (SPY)

Market Cap

$169.73M

Dividend YieldN/A

Average Volume (3M)1.64M

Price to Earnings (P/E)4.1

Beta (1Y)0.36

Revenue Growth-4.47%

EPS Growth-44.64%

CountryUS

Employees22

SectorReal Estate

Sector Strength77

IndustryREIT - Office

Share Statistics

EPS (TTM)0.39

Shares Outstanding107,421,000

10 Day Avg. Volume3,401,767

30 Day Avg. Volume1,637,582

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.97

Price to Cash Flow (P/CF)1.30

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$1.65

Price Target Upside4.43% Upside

Rating ConsensusHold

Number of Analyst Covering1

Equity Commonwealth Business Overview & Revenue Model

Company DescriptionEquity Commonwealth (EQC) is a real estate investment trust (REIT) focused on the ownership and operation of office buildings across the United States. Headquartered in Chicago, Illinois, the company strategically invests in high-quality office properties in key urban and suburban markets. With a portfolio that includes a range of properties, Equity Commonwealth aims to generate stable rental income and achieve long-term capital appreciation for its investors.

How the Company Makes MoneyEquity Commonwealth makes money primarily through the leasing and management of its office properties. The company generates revenue by renting out office spaces to a diverse tenant base, which includes businesses from various sectors. Lease agreements typically include base rent, which provides a consistent income stream, and may also include additional revenues from tenant reimbursements for property expenses such as maintenance and utilities. EQC's earnings are significantly influenced by occupancy rates, rental rates, and the ability to effectively manage operational costs. Strategic property dispositions and acquisitions also play a role in optimizing the portfolio's performance and enhancing shareholder value.

Equity Commonwealth Financial Statement Overview

Summary

Equity Commonwealth demonstrates strong financial stability through a robust balance sheet and effective cash flow management, yet faces challenges in revenue generation and profit consistency. Despite low leverage and substantial cash reserves, the company must enhance revenue growth and operational efficiency to improve profitability.

Income Statement

Neutral

Equity Commonwealth's revenue has shown a declining trend from 2019 to 2024, with significant fluctuations in EBIT and net income. The gross profit margin remains healthy due to low COGS, but the net profit margin has been volatile, partly due to non-operational income. The company needs to stabilize its revenue and operating income for better performance.

Balance Sheet

Positive

The company maintains a strong balance sheet with no debt and substantial cash reserves. The debt-to-equity ratio is favorable at 0, and the equity ratio is robust, indicating financial stability. Return on equity has been inconsistent due to fluctuating net income but remains positive overall.

Cash Flow

Neutral

Operating cash flow is strong, and free cash flow has been positive, indicating good cash management. However, the fluctuations in operating cash flow to net income ratio suggest variable operational efficiency. The company has managed investing and financing activities well, maintaining cash flow positivity.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
58.43M	47.98M	60.52M	63.14M	58.00M	66.28M
	Gross Profit
19.02M	47.98M	33.06M	38.96M	32.11M	37.42M
	EBIT
9.06M	17.89M	-21.36M	-9.33M	-16.31M	6.09M
	EBITDA
-1.30M	36.56M	-3.91M	8.58M	-5.33M	4.19M
	Net Income Common Stockholders
49.91M	23.66M	91.16M	29.27M	-16.43M	451.29M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
138.70M	160.51M	2.16B	2.58B	2.80B	2.99B
	Total Assets
6.23B	293.62M	2.43B	2.85B	3.08B	3.28B
	Total Debt
2.94B	0.00	0.00	7.35M	4.78M	5.91M
	Net Debt
2.80B	-160.51M	-2.16B	-2.57B	-2.80B	-2.98B
	Total Liabilities
3.08B	114.77M	34.93M	31.15M	26.11M	34.51M
	Stockholders Equity
3.15B	178.60M	2.39B	2.82B	3.05B	3.24B
Cash Flow		Free Cash Flow
123.20M	99.13M	122.27M	61.46M	9.31M	21.29M
	Operating Cash Flow
124.28M	99.13M	122.27M	65.04M	16.11M	33.33M
	Investing Cash Flow
-13.78M	13.92M	-5.69M	-3.48M	-6.80M	643.25M
	Financing Cash Flow
-13.13M	-11.13M	-538.26M	-280.34M	-195.53M	-490.00M

Equity Commonwealth Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.58

Price Trends

50DMA

1.63

Negative

100DMA

3.53

Negative

200DMA

11.73

Negative

Market Momentum

MACD

-0.03

Negative

RSI

37.42

Neutral

STOCH

44.44

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EQC, the sentiment is Negative. The current price of 1.58 is below the 20-day moving average (MA) of 1.60, below the 50-day MA of 1.63, and below the 200-day MA of 11.73, indicating a bearish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 37.42 is Neutral, neither overbought nor oversold. The STOCH value of 44.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EQC.

Equity Commonwealth Risk Analysis

Equity Commonwealth disclosed 30 risk factors in its most recent earnings report. Equity Commonwealth reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Equity Commonwealth Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	59 Neutral	$2.72B	11.59	0.11%	8770.69%	5.44%	-16.52%
EQC	56 Neutral	$169.73M	4.10	2.10%	―	-4.47%	-44.64%
CIO	55 Neutral	$203.41M	―	-2.35%	8.03%	-4.45%	-147.11%
FSP	51 Neutral	$159.49M	―	-7.70%	2.60%	-19.86%	-9.50%
ONL	50 Neutral	$98.30M	―	-12.49%	18.29%	-15.46%	-81.31%
HPP	48 Neutral	$322.32M	―	-11.53%	4.50%	-11.47%	-89.12%
NYC	41 Neutral	$31.61M	―	-90.59%	―	-1.36%	-19.10%

* Real Estate Sector Average

Performance Comparison

EQC

Equity Commonwealth

1.58

-17.19

-91.58%

FSP

Franklin Street Properties

1.54

-0.36

-18.95%

HPP

Hudson Pacific Properties

2.22

-3.65

-62.18%

CIO

City Office REIT

5.04

0.75

17.48%

NYC

New York City REIT

12.00

5.90

96.72%

ONL

Orion Office REIT

1.75

-1.24

-41.47%

Equity Commonwealth Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -7.60% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

The call highlighted a successful execution of asset sales and effective management of the wind-down process, with strong shareholder support and favorable distributions. However, the transition to a liquidating trust and delisting from the NYSE marks a significant organizational change.

Highlights

Completion of Asset Sales

The sale of 1225 Seventeenth Street Plaza in Denver was completed for a gross price of $132.5 million. This marks the successful execution of the sale of all company real estate assets, totaling over $7.9 billion in assets sold since 2014.

Shareholder Approval and Distributions

At the November 12 Special Shareholder Meeting, 99% of votes cast were in favor of the plan of sale. An initial liquidating distribution of $19 per share was paid in December, with an updated estimated aggregate shareholder liquidating distribution range of $20.55 to $20.70 per common share.

Debt and Equity Management

The company has retired $3.4 billion in debt and preferred shares, repurchased $652 million of common shares, and paid $3.8 billion in distributions to common shareholders.

Efficient Wind-Down Process

The company has effectively managed the wind-down process, including the sale of remaining properties and planning for the final distribution and delisting from the NYSE.

Lowlights

Transition to Liquidating Trust

The company's shares will be delisted from the New York Stock Exchange, and the remaining assets and liabilities will be transferred to a Maryland liquidating trust, indicating the end of operations as a public company.

Company Guidance

During the call, Bill Griffiths, CFO of Equity Commonwealth, provided detailed guidance on the company's wind-down process. The company successfully completed the sale of 1225 Seventeenth Street Plaza in Denver for a gross price of $132.5 million, netting $124.4 million after credits. Since 2014, EQC has sold over $7.9 billion in assets, including 168 properties and three land parcels totaling 45.8 million square feet, with an aggregate gross sales price of $7.2 billion. Additionally, they retired $3.4 billion of debt and preferred shares, repurchased $652 million in common shares, and distributed $3.8 billion to shareholders. The recent Special Shareholder Meeting saw 99% approval for the plan of sale. EQC adopted a liquidation basis of accounting for the 2024 10-K, with net assets in liquidation estimated at $179 million. The estimated shareholder liquidating distribution range was updated to $20.55 to $20.70 per share, inclusive of a $19 distribution already paid. The final distribution is anticipated in mid-April, after which the company's shares will be delisted from the NYSE, and EQC will transfer remaining assets to a Maryland liquidating trust, converting shares into beneficial interest units. The company plans to deregister with the SEC and expects to maintain REIT status until the transfer.

Equity Commonwealth Corporate Events

Delistings and Listing ChangesDividendsRegulatory Filings and Compliance

Equity Commonwealth Announces Final Liquidating Distribution

Neutral

Apr 1, 2025

On April 1, 2025, Equity Commonwealth announced its Board of Trustees has authorized a final cash liquidating distribution of $1.60 per common share, to be paid on April 22, 2025, marking the company’s continued winding down process. Following the payment and delisting from NYSE, the company will transfer remaining assets to a Maryland liquidating trust and deregister with the SEC by the end of the second quarter of 2025, converting common shares into beneficial interest units in the trust.

Executive/Board ChangesBusiness Operations and Strategy

Equity Commonwealth Approves Bonuses Amid Strategic Liquidation

Neutral

Jan 27, 2025

On January 27, 2025, Equity Commonwealth’s Compensation Committee approved short-term incentive cash bonuses for its named executive officers. This decision followed the company’s strategic shift towards liquidation, with the sale of three out of four remaining properties in 2024, which rendered previous performance metrics invalid.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.