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Essex Property (ESS)
NYSE:ESS
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Essex Property
(NYSE:ESS)
Rating:60Neutral
Price Target:
$292.00
▲( 6.66% Upside)
Positive Factors
Acquisition Strategy
ESS executed on its acquisition pipeline with a $345.4 million investment in Northern California and began development of a $311 million project in South San Francisco.
Investment Plans
ESS plans to be a net acquirer in 2025 with $1 billion in acquisitions, demonstrating growth ambitions.
Lease Rates
ESS reported a sequential and year-over-year improvement in new lease rates.
Negative Factors
Earnings Guidance
FY25 Core FFO guidance came in approximately 1% below expectations, implying only 1.3% year-over-year growth.
Financial Guidance
ESS's 2025 guidance was maintained below Street expectations and 2Q25 was initiated below expectations.
Sector Performance
ESS sold off at the very start of 2025 amid a broader apartment group sell-off following UDR's update, and then underperformed apartment peers amid California wildfires.
Essex Property (ESS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$19.17B
Dividend Yield3.45%
Average Volume (3M)460.70K
Price to Earnings (P/E)27.5
Beta (1Y)0.82
Revenue Growth7.61%
EPS Growth27.83%
CountryUS
Employees1,712
SectorReal Estate
Sector Strength56
IndustryREIT - Residential
Share Statistics
EPS (TTM)3.16
Shares Outstanding64,385,180
10 Day Avg. Volume380,477
30 Day Avg. Volume460,703
Financial Highlights & Ratios
PEG Ratio-1.04
Price to Book (P/B)3.26
Price to Sales (P/S)0.00
P/FCF Ratio20.14
Enterprise Value/Market Cap0.94
Enterprise Value/Revenue2.57
Enterprise Value/Gross Profit17.86
Enterprise Value/Ebitda3.58
Forecast
1Y Price Target
$320.50Price Target Upside17.07% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
Essex Property Business Overview & Revenue Model
Company DescriptionEssex Property Trust, Inc. (ESS) is a fully integrated real estate investment trust (REIT) that acquires, develops, and manages multifamily residential properties in selected West Coast markets, primarily in California and Washington. The company's portfolio focuses on high-quality apartment communities situated in supply-constrained coastal markets, benefiting from favorable demographics and economic conditions that support strong rental demand.
How the Company Makes MoneyEssex Property Trust primarily generates revenue through rental income from its multifamily residential properties. The company's revenue model is centered around collecting monthly rent from tenants occupying its apartment units. Additionally, Essex Property may engage in development activities to expand its portfolio, thus increasing rental income potential. The company also occasionally sells properties that have reached optimal value, which can contribute to short-term revenue through capital gains. Furthermore, Essex Property Trust utilizes strategic partnerships and joint ventures to enhance its investment capabilities and maximize returns, benefiting from shared expertise and capital resources.
Essex Property Financial Statement Overview
Summary
Essex Property shows strong revenue growth and operational efficiency, but recent net income losses and balance sheet restructuring are concerning. The robust cash flow provides a buffer against income volatility, but significant changes in equity and asset base necessitate careful monitoring.Income Statement
Essex Property's revenue has shown a steady growth trajectory, increasing from $1,460 million in 2019 to $1,774 million in 2024. However, the recent net income loss of $69.78 million in 2024, down from a profit of $405.83 million in 2023, adversely affects profitability metrics. The gross profit margin remains robust, while EBIT and EBITDA margins are strong, indicating operational efficiency. The decline in net income in the latest year impacts the overall financial health of the income statement.60
Neutral
Balance Sheet
The balance sheet shows a complete erosion of reported equity in 2024, raising concerns about financial stability. Previous years exhibited a stable debt-to-equity ratio, but the current lack of stockholders' equity suggests potential restructuring or asset revaluation. Total assets have decreased significantly from $12.36 billion in 2023 to $4.37 billion in 2024, indicating a significant change in asset base. This dramatic balance sheet shift warrants close scrutiny.50
Neutral
Cash Flow
Essex Property's cash flow remains a strong point, with a high operating cash flow of $1,068 million in 2024, up from $980 million in 2023. The free cash flow has also increased to $1,068 million, reflecting effective cash management. The free cash flow to net income ratio is highly favorable due to the net income loss, but this could indicate cash flow resilience in challenging times. Consistent positive cash flow generation supports operational and investment activities.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.81B | 1.77B | 1.67B | 1.61B | 1.44B | 1.50B | Gross Profit |
| 1.01B | 1.21B | 1.14B | 1.10B | 959.11M | 1.02B | EBIT |
| 829.38M | 703.10M | 584.34M | 595.23M | 530.00M | 772.10M | EBITDA |
| 1.48B | 1.63B | 1.49B | 1.13B | 1.05B | 1.02B | Net Income Common Stockholders |
| 671.90M | 741.52M | 405.82M | 408.31M | 488.55M | 568.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 174.75M | 136.59M | 479.54M | 155.42M | 250.47M | 231.81M | Total Assets |
| 13.19B | 12.93B | 12.36B | 12.37B | 13.00B | 12.94B | Total Debt |
| 0.00 | 6.65B | 6.27B | 6.03B | 6.36B | 6.33B | Net Debt |
| 6.75B | 6.59B | 5.88B | 5.98B | 6.30B | 6.24B | Total Liabilities |
| 7.41B | 7.18B | 6.74B | 6.45B | 6.79B | 6.72B | Stockholders Equity |
| 5.57B | 5.54B | 5.42B | 5.72B | 5.99B | 6.00B |
| Cash Flow | Free Cash Flow | ||||
| 903.53M | 931.91M | 839.69M | 812.46M | 784.06M | 713.02M | Operating Cash Flow |
| 1.03B | 1.07B | 980.06M | 975.65M | 905.26M | 803.11M | Investing Cash Flow |
| -850.74M | -973.05M | -145.14M | 145.96M | -397.40M | -416.90M | Financing Cash Flow |
| -603.17M | -412.77M | -477.27M | -1.14B | -533.26M | -383.26M |
Essex Property Technical Analysis
Negative
273.76
Price Trends
284.55
Negative
285.66
Negative
287.99
Negative
Market Momentum
-0.32
Positive
41.86
Neutral
36.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESS, the sentiment is Negative. The current price of 273.76 is below the 20-day moving average (MA) of 282.70, below the 50-day MA of 284.55, and below the 200-day MA of 287.99, indicating a bearish trend. The MACD of -0.32 indicates Positive momentum. The RSI at 41.86 is Neutral, neither overbought nor oversold. The STOCH value of 36.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ESS.
Essex Property Risk Analysis
Essex Property disclosed 62 risk factors in its most recent earnings report. Essex Property 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 1 New Risks
1.
Increased public, media, regulatory and governmental scrutiny of the housing industry could materially adversely affect our business, reputation, and results of operations. Q4, 2024
Essex Property Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $29.70B | 25.97 | 9.67% | 3.40% | 5.61% | 19.66% | |
73 Outperform | $21.04B | 99.88 | 4.92% | 3.32% | 6.11% | -37.43% | |
73 Outperform | $27.85B | 27.74 | 9.01% | 3.82% | 3.91% | 8.78% | |
70 Outperform | $13.91B | 117.52 | 3.40% | 4.06% | 2.35% | -73.89% | |
60 Neutral | $2.82B | 10.38 | 0.33% | 8508.19% | 5.98% | -17.49% | |
60 Neutral | $19.17B | 27.52 | 12.09% | 3.45% | 7.61% | 27.83% | |
60 Neutral | $19.26B | 33.37 | 9.37% | 3.72% | 1.55% | 0.73% |
* Real Estate Sector Average
Performance Comparison
ESS
Essex Property
273.76
24.52
9.84%
AVB
AvalonBay
199.86
11.98
6.38%
EQR
Equity Residential
68.30
5.34
8.48%
MAA
Mid-America Apartment
154.41
26.68
20.89%
UDR
UDR
40.10
2.85
7.65%
INVH
Invitation Homes
33.10
-0.29
-0.87%
Essex Property Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: -0.51%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a cautiously optimistic outlook. While the company reported strong first-quarter performance with improvements in key metrics such as FFO per share, delinquency rates, and lease rates, macroeconomic uncertainties and regional challenges, particularly in Southern California, tempered the potential for upward guidance revision.Q1-2025 Updates
Positive Updates
Core FFO Per Share Exceeds Guidance
First quarter core FFO per share exceeded the midpoint of Essex Property Trust's guidance range by $0.05, driven by better-than-expected performance in the consolidated portfolio, joint venture properties, and lower interest expenses.
Significant Acquisitions in Northern California
Essex Property Trust completed $345 million in acquisitions in Northern California, funded by dispositions in Southern California, to optimize their operating platform and generate above-market returns.
Improvement in Delinquency Rates
Delinquency rates improved significantly, especially in Los Angeles, where it decreased to 1.3% of scheduled rent, compared to 3.9% for the same period last year.
Low Turnover Rate Achieved
The company reported a notably low turnover rate of 35% while achieving positive new lease rate growth and stable occupancy levels.
Positive New Lease Rates Across Regions
New lease rates turned positive in all three major regions, led by Northern California at 1.5%, Seattle at 1.3%, and Southern California at 0.2%.
Refinancing of 2025 Debt Maturities
The company successfully refinanced the majority of its 2025 debt maturities with an unsecured bond offering, strengthening its balance sheet.
Negative Updates
Macroeconomic Uncertainty Affects Outlook
Despite solid performance, the company refrained from revising guidance upward due to macroeconomic uncertainties, particularly related to U.S. and global trade policy.
Challenges in Southern California
Southern California, particularly Los Angeles, continues to face challenges with a softer labor market and higher delinquency rates compared to historical averages.
Oakland Rent Growth Lags
Oakland experienced negative 1.2% new rate growth due to elevated supply, although it has begun to show incremental improvement.
Concerns Over Policy Changes Impacting Costs
Potential impacts of policy changes on materials costs could affect operating expenses, adding to economic uncertainty.
Company Guidance
In the Essex Property Trust First Quarter 2025 earnings call, the company provided guidance that reflects a cautious yet optimistic approach to future performance. Despite exceeding the midpoint of their guidance range for core FFO per share by $0.05, Essex chose not to revise their full-year guidance upwards due to macroeconomic uncertainties, such as global trade policies and potential impacts on business investment and job growth. The company reported a 2.8% blended net effective rent growth for the quarter and highlighted a significant improvement in delinquency rates, particularly in Los Angeles, where it decreased to 1.3% of scheduled rent. Essex's strategic reallocation from Southern to Northern California markets resulted in $345 million in acquisitions. The company expects modest rent growth in its supply-constrained markets, with new housing supply in 2025 being exceptionally low at 50 basis points. Essex remains focused on maximizing revenues and generating long-term accretion, with a strong balance sheet and over $1 billion in available liquidity supporting their investment strategy.Essex Property Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Essex Property Secures New Credit Facilities
Positive
May 20, 2025
On May 20, 2025, Essex Property Trust, Inc., through its Operating Partnership, entered into a Closing Agreement with PNC Bank and other lenders to replace its existing $1.2 billion Revolving Credit Facility with a new facility. The new facility, expected to be effective in July 2025, will have a maximum borrowing capacity of $1.5 billion, with potential to increase to $2.5 billion, and a maturity date in January 2030. Additionally, Essex established a $300 million Unsecured Term Loan Credit Facility with U.S. Bank, maturing in 2028, and initiated a $750 million Commercial Paper Program. These financial maneuvers are aimed at enhancing liquidity and financial flexibility, positioning Essex Property Trust to better manage its operations and growth strategies.
The most recent analyst rating on (ESS) stock is a Sell with a $303.00 price target. To see the full list of analyst forecasts on Essex Property stock, see the ESS Stock Forecast page.
Executive/Board ChangesShareholder Meetings
Essex Property Holds Annual Meeting, Elects Directors
Neutral
May 15, 2025
On May 13, 2025, Essex Property Trust, Inc. held its Annual Meeting where stockholders elected directors to serve until the 2026 annual meeting, ratified KPMG LLP as the independent registered public accounting firm for 2025, and approved executive officer compensation on a non-binding advisory basis. These decisions are expected to impact the company’s governance and financial oversight, reinforcing its strategic direction and operational stability.
The most recent analyst rating on (ESS) stock is a Sell with a $303.00 price target. To see the full list of analyst forecasts on Essex Property stock, see the ESS Stock Forecast page.
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.