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

Institutional and Insider Ownership

88.9% of Equity Residential shares are held by institutional investors. 1.7% of Macerich shares are held by company insiders. Comparatively, 2.4% of Equity Residential shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Macerich and Equity Residential’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Macerich $960.35 million 3.90 $60.02 million $3.85 6.89
Equity Residential $2.58 billion 12.03 $657.53 million $3.25 25.69

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

Risk and Volatility

Macerich has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, Equity Residential has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Macerich and Equity Residential, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Macerich 2 10 1 0 1.92
Equity Residential 3 6 2 0 1.91

Macerich presently has a consensus target price of $39.96, indicating a potential upside of 50.73%. Equity Residential has a consensus target price of $81.64, indicating a potential downside of 2.23%. Given Macerich’s stronger consensus rating and higher probable upside, analysts plainly believe Macerich is more favorable than Equity Residential.

Dividends

Macerich pays an annual dividend of $3.00 per share and has a dividend yield of 11.3%. Equity Residential pays an annual dividend of $2.27 per share and has a dividend yield of 2.7%. Macerich pays out 77.9% 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 69.8% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Macerich 8.76% 2.69% 0.91%
Equity Residential 29.88% 7.73% 3.84%

Summary

Equity Residential beats Macerich on 11 of the 16 factors compared between the two stocks.

Macerich Company Profile

Macerich, an S&P 500 company, is a fully integrated, self-managed and self-administered real estate investment trust, which focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the United States. Macerich currently owns 51 million square feet of real estate consisting primarily of interests in 47 regional shopping centers. Macerich specializes in successful retail properties in many of the country's most attractive, densely populated markets with significant presence in the West Coast, Arizona, Chicago, and the New York Metro area to Washington, DC corridor. A recognized leader in sustainability, Macerich has earned Nareit's prestigious "Leader in the Light" award every year from 2014-2018. For the fourth straight year in 2018 Macerich achieved the #1 GRESB ranking in the North American Retail Sector, among many other environmental accomplishments.

Equity Residential Company Profile

Equity Residential is an S&P 500 company focused on the acquisition, development and management of rental apartment properties located in urban and high-density suburban markets where today's renters want to live, work and play. Equity Residential owns or has investments in 307 properties consisting of 79,482 apartment units, primarily located in Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California and Denver.

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