Essex Property (ESS) AI Stock Analysis

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Essex Property

(NYSE:ESS)

68Neutral

Essex Property's overall stock score is driven by solid financial performance in revenue growth and cash flow, despite challenges in net income and balance sheet restructuring. Technical indicators suggest stability, while valuation metrics are balanced. Earnings call insights reveal cautious optimism with strategic acquisitions and improvements in key metrics, but macroeconomic uncertainties remain a concern.

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. S&P 500 (SPY)

Market Cap

$19.10B

Dividend Yield3.44%

Average Volume (3M)484.75K

Price to Earnings (P/E)27.6

Beta (1Y)0.82

Revenue Growth7.61%

EPS Growth27.83%

CountryUS

Employees1,712

SectorReal Estate

Sector Strength65

IndustryREIT - Residential

Share Statistics

EPS (TTM)3.16

Shares Outstanding64,385,180

10 Day Avg. Volume399,677

30 Day Avg. Volume484,747

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 Cap0.95

Enterprise Value/Revenue2.57

Enterprise Value/Gross Profit17.86

Enterprise Value/Ebitda3.58

Forecast

1Y Price Target

$320.50

Price Target Upside11.48% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

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 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

Neutral

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.

Balance Sheet

Neutral

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.

Cash Flow

Positive

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Positive

Last Price287.50

Price Trends

50DMA

285.18

Positive

100DMA

285.79

Positive

200DMA

287.94

Negative

Market Momentum

MACD

1.10

Negative

RSI

54.33

Neutral

STOCH

89.52

Negative

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 287.5 is above the 20-day moving average (MA) of 282.80, above the 50-day MA of 285.18, and below the 200-day MA of 287.94, indicating a neutral trend. The MACD of 1.10 indicates Negative momentum. The RSI at 54.33 is Neutral, neither overbought nor oversold. The STOCH value of 89.52 is Negative, 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 (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EQR	76 Outperform	$27.95B	27.92	9.01%	3.81%	3.91%	8.78%
AVB	75 Outperform	$29.70B	25.98	9.67%	3.28%	5.61%	19.66%
INVH	74 Outperform	$21.09B	100.12	4.92%	3.31%	6.11%	-37.43%
ESS	68 Neutral	$19.10B	27.63	12.09%	3.44%	7.61%	27.83%
UDR	68 Neutral	$13.99B	118.16	3.40%	4.04%	2.35%	-73.89%
MAA	66 Neutral	$19.38B	33.97	9.37%	3.70%	1.55%	0.73%
Sector *	60 Neutral	$2.82B	10.29	0.31%	8508.26%	5.91%	-17.42%

* Real Estate Sector Average

Performance Comparison

ESS

Essex Property

287.50

32.28

12.65%

AVB

AvalonBay

208.59

16.34

8.50%

EQR

Equity Residential

71.11

6.78

10.54%

MAA

Mid-America Apartment

160.35

29.18

22.25%

UDR

42.00

3.91

10.27%

INVH

Invitation Homes

34.32

0.29

0.85%

Essex Property Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 4.48%|

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

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.

Spark’s Take on ESS Stock

According to Spark, TipRanks’ AI Analyst, ESS is a Neutral.

Essex Property’s strong cash flow and revenue growth are offset by recent net income losses and a significant balance sheet restructuring. Technical indicators are mixed, and while the valuation appears moderate, future growth hinges on overcoming macroeconomic challenges and stabilizing financial health. The earnings call’s positive elements are tempered by cautious guidance due to external uncertainties.

To see Spark’s full report on ESS stock, click here.

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.