Financial Survey: Essex Property Trust (NYSE:ESS) versus Lexington Realty Trust (NYSE:LXP)

Essex Property Trust (NYSE:ESS) and Lexington Realty Trust (NYSE:LXP) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Dividends

Essex Property Trust pays an annual dividend of $8.31 per share and has a dividend yield of 3.5%. Lexington Realty Trust pays an annual dividend of $0.43 per share and has a dividend yield of 4.2%. Essex Property Trust pays out 62.1% of its earnings in the form of a dividend. Lexington Realty Trust pays out 53.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Essex Property Trust has increased its dividend for 27 consecutive years and Lexington Realty Trust has increased its dividend for 1 consecutive years. Lexington Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Essex Property Trust and Lexington Realty Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essex Property Trust $1.46 billion 10.55 $439.29 million $13.38 17.66
Lexington Realty Trust $325.97 million 8.67 $279.91 million $0.80 12.76

Essex Property Trust has higher revenue and earnings than Lexington Realty Trust. Lexington Realty Trust is trading at a lower price-to-earnings ratio than Essex Property Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Essex Property Trust and Lexington Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essex Property Trust 39.89% 9.46% 4.57%
Lexington Realty Trust 49.72% 9.57% 4.87%

Risk and Volatility

Essex Property Trust has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Lexington Realty Trust has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Essex Property Trust and Lexington Realty Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essex Property Trust 1 9 6 0 2.31
Lexington Realty Trust 0 0 2 0 3.00

Essex Property Trust presently has a consensus target price of $254.87, suggesting a potential upside of 7.84%. Lexington Realty Trust has a consensus target price of $12.25, suggesting a potential upside of 19.98%. Given Lexington Realty Trust’s stronger consensus rating and higher possible upside, analysts plainly believe Lexington Realty Trust is more favorable than Essex Property Trust.

Institutional and Insider Ownership

90.0% of Essex Property Trust shares are held by institutional investors. Comparatively, 80.4% of Lexington Realty Trust shares are held by institutional investors. 3.5% of Essex Property Trust shares are held by company insiders. Comparatively, 2.1% of Lexington Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Essex Property Trust beats Lexington Realty Trust on 10 of the 17 factors compared between the two stocks.

About Essex Property Trust

Essex Property Trust, Inc. operates as a real estate investment trust. It engages in the ownership, operation, management, acquisition, development, and redevelopment of predominantly apartment communities. The company was founded by George M. Marcus in 1971 and is headquartered in San Mateo, CA.

About Lexington Realty Trust

Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) that owns a portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased industrial properties across the United States. Lexington seeks to expand its industrial portfolio through build-to-suit transactions, sale-leaseback transactions and other transactions, including acquisitions.

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