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Essex Property (ESS)
NYSE:ESS
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Essex Property
(NYSE:ESS)
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Rating:71Outperform
Price Target:
$296.00
â–²(10.53% Upside)
Essex Property's overall stock score reflects its strong financial performance and strategic investments, particularly in Northern California. The company's stable valuation and attractive dividend yield further support its position. However, declining free cash flow growth and challenges in the Southern California market pose risks that need to be addressed.
Positive Factors
Strong Financial Performance
Exceeding Core FFO guidance indicates strong operational efficiency and financial health, supporting long-term profitability and shareholder value.
Successful Capital Allocation
Strategic investments in high-yield properties enhance asset value and income potential, strengthening the company's competitive position in key markets.
Balance Sheet Enhancements
Enhanced financial flexibility through favorable financing terms and increased credit capacity supports growth initiatives and risk management.
Negative Factors
Declining Free Cash Flow Growth
A significant decline in free cash flow growth may limit the company's ability to fund new investments and return capital to shareholders, impacting long-term growth.
Los Angeles Market Challenges
Weak performance in a key market like Los Angeles could hinder overall portfolio growth and profitability, requiring strategic adjustments to address market-specific challenges.
Structured Finance Earnings Headwind
While strategic, the reduction in structured finance impacts earnings, potentially affecting short-term financial results and requiring careful management to mitigate impacts.
Essex Property (ESS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$17.85B
Dividend Yield3.75%
Average Volume (3M)407.84K
Price to Earnings (P/E)21.2
Beta (1Y)0.80
Revenue Growth7.56%
EPS Growth54.15%
CountryUS
Employees1,712
SectorReal Estate
Sector Strength53
IndustryREIT - Residential
Share Statistics
EPS (TTM)3.44
Shares Outstanding64,404,020
10 Day Avg. Volume446,664
30 Day Avg. Volume407,841
Financial Highlights & Ratios
PEG Ratio0.30
Price to Book (P/B)3.31
Price to Sales (P/S)10.33
P/FCF Ratio19.67
Enterprise Value/Market Cap1.41
Enterprise Value/Revenue13.70
Enterprise Value/Gross Profit21.40
Enterprise Value/Ebitda15.31
Forecast
1Y Price Target
$293.66Price Target Upside9.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Essex Property Business Overview & Revenue Model
Company DescriptionEssex Property Trust, Inc., an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 246 apartment communities comprising approximately 60,000 apartment homes with an additional 6 properties in various stages of active development.
How the Company Makes MoneyEssex Property generates revenue primarily through the rental income derived from its multifamily residential properties. The company leases apartment units to tenants, creating a steady stream of cash flow. Additionally, Essex benefits from other revenue streams such as ancillary income, which includes fees from services like parking, laundry facilities, and rental of retail spaces within its properties. The company may also engage in strategic property sales or refinancing activities to realize gains from its real estate investments. Significant partnerships with local developers and community organizations further enhance its ability to identify profitable investment opportunities and manage properties effectively, contributing to its overall earnings.
Essex Property Key Performance Indicators (KPIs)
Any
Net Operating Income
Reflects the company's profitability from core operations, excluding non-operating items, providing insight into operational efficiency and financial health.
Reflects the company's profitability from core operations, excluding non-operating items, providing insight into operational efficiency and financial health.
Data provided by:
Main Street Data
Main Street DataEssex Property Earnings Call Summary
Earnings Call Date:Jul 29, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The call highlighted strong financial performance and strategic investments, particularly in Northern California, but also noted challenges in the Los Angeles market and a temporary earnings headwind from the reduction of the structured finance book.Q2-2025 Updates
Positive Updates
Core FFO Outperformance
Essex Property Trust exceeded the midpoint of their guidance range for Core FFO per share by $0.07 in the second quarter.
Same-Property Revenue Growth
The company raised the midpoint for same-property revenue growth by 15 basis points to 3.15% due to higher other income and better delinquency collections.
Successful Capital Allocation
Essex achieved NAV accretion by investing in Northern California properties with yields in the mid to high 4% range, ahead of cap rate compression.
Balance Sheet Enhancements
The company issued a $300 million delayed draw term loan at an attractive 4.1% rate and expanded its line of credit to $1.5 billion.
Negative Updates
Los Angeles Market Challenges
Los Angeles showed weaker performance with only 1.3% blended rent growth due to elevated supply deliveries and legacy delinquency challenges.
Soft Demand in Southern California
The Southern California market, which mirrors the U.S. economy, remains soft, impacting overall portfolio performance.
Structured Finance Earnings Headwind
The reduction in the structured finance book is causing a temporary headwind to Core FFO growth, with significant impacts expected in the fourth quarter.
Company Guidance
During the Essex Property Trust Second Quarter 2025 Earnings Call, the company reported a $0.07 Core FFO outperformance in the second quarter and increased guidance for the year. The same store portfolio saw a 3% blended rate growth, with Northern California and Seattle achieving 3.8% and 3.7% growth, respectively. Southern California lagged with 2% growth, particularly in Los Angeles. Notably, suburban markets like San Mateo and San Jose outperformed with 5.6% and 4.4% growth. The company anticipates a stable job environment on the West Coast for the second half of the year, with market rents expected to moderate consistent with normal seasonality. Essex raised its same-property revenue guidance by 15 basis points to 3.15%, while reducing its same-property expense midpoint by 50 basis points to 3.25%. The company also reported that investor appetite for West Coast multifamily properties remains healthy, with average cap rates in the mid-4% for institutional quality assets. Essex's capital strategy includes reducing their structured finance book to less than 4% of Core FFO by year-end, enhancing their balance sheet flexibility with new financing arrangements, and maintaining healthy net debt to EBITDA of 5.5x.Essex Property Financial Statement Overview
Summary
Essex Property demonstrates solid financial health with strong profitability and stable growth. The income statement reflects efficient operations, while the balance sheet shows a balanced capital structure. However, declining free cash flow growth is a potential concern that needs monitoring.Income Statement
Essex Property shows a strong income statement with a solid gross profit margin of 52.07% and a net profit margin of 43.51% for TTM. The revenue growth rate is modest at 1.52% TTM, indicating stable growth. However, the decline in gross profit margin from previous periods suggests potential cost pressures. The EBIT and EBITDA margins remain robust, reflecting efficient operations.75
Positive
Balance Sheet
The balance sheet is stable with a debt-to-equity ratio of 1.21, indicating moderate leverage typical for the REIT industry. Return on equity is healthy at 14.44% TTM, showing effective use of equity to generate profits. The equity ratio of 42.76% suggests a balanced capital structure, though slightly high leverage could pose risks if interest rates rise.70
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth by 124.4% TTM, which is concerning. The operating cash flow to net income ratio of 1.37 indicates good cash generation relative to net income. However, the free cash flow to net income ratio of 0.86 suggests that not all earnings are translating into free cash flow, which could impact future investments.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.84B | 1.77B | 1.67B | 1.61B | 1.44B | 1.50B |
| Gross Profit | 1.18B | 1.21B | 1.14B | 1.11B | 1.21B | 1.28B |
| EBITDA | 1.65B | 1.63B | 1.19B | 1.20B | 1.50B | 1.61B |
| Net Income | 800.35M | 741.52M | 405.82M | 408.31M | 488.55M | 568.87M |
Balance Sheet | ||||||
| Total Assets | 13.18B | 12.93B | 12.36B | 12.37B | 13.00B | 12.94B |
| Cash, Cash Equivalents and Short-Term Investments | 140.84M | 136.59M | 479.54M | 146.04M | 240.25M | 221.40M |
| Total Debt | 6.81B | 6.65B | 6.27B | 6.03B | 6.36B | 6.33B |
| Total Liabilities | 7.34B | 7.18B | 6.74B | 6.45B | 6.79B | 6.72B |
| Stockholders Equity | 5.64B | 5.54B | 5.42B | 5.72B | 5.99B | 6.00B |
Cash Flow | ||||||
| Free Cash Flow | 892.29M | 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 | -672.14M | -973.05M | -145.14M | 145.96M | -397.40M | -416.90M |
| Financing Cash Flow | -356.29M | -419.74M | -477.27M | -1.14B | -533.26M | -383.26M |
Essex Property Technical Analysis
Positive
267.80
Price Trends
266.94
Positive
274.25
Negative
278.93
Negative
Market Momentum
0.02
Negative
52.35
Neutral
24.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESS, the sentiment is Positive. The current price of 267.8 is above the 20-day moving average (MA) of 266.10, above the 50-day MA of 266.94, and below the 200-day MA of 278.93, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 52.35 is Neutral, neither overbought nor oversold. The STOCH value of 24.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks
Essex Property Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | 16.75B | 28.58 | 9.67% | 4.31% | 1.19% | 10.52% | |
71 Outperform | $17.85B | 21.20 | 14.40% | 3.75% | 7.56% | 54.15% | |
69 Neutral | 17.89B | 64.42 | 5.64% | 3.98% | 4.41% | -0.16% | |
68 Neutral | 24.64B | 24.39 | 9.19% | 4.27% | 4.49% | 5.87% | |
68 Neutral | 12.32B | 95.75 | 3.97% | 4.60% | 2.29% | -4.89% | |
67 Neutral | 15.15B | 74.01 | 3.40% | 3.89% | 0.76% | -60.70% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% |
* Real Estate Sector Average
Performance Comparison
ESS
Essex Property
267.80
-20.01
-6.95%
EQR
Equity Residential
64.53
-7.01
-9.80%
MAA
Mid-America Apartment
139.57
-13.20
-8.64%
UDR
UDR
37.18
-6.33
-14.55%
CPT
Camden Property
107.00
-13.28
-11.04%
INVH
Invitation Homes
29.18
-4.82
-14.18%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.