Why Equity Residential Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, multifamily property REIT Equity Residential (NYSE: EQR  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Equity Residential and see what CAPS investors are saying about the stock right now.

Equity Residential facts

Headquarters (founded)

Chicago (1966)

Market Cap

$20.7 billion

Industry

Residential REIT

Trailing-12-Month Revenue

$2.2 billion

Management

Founder / Chairman Samuel Zell
CEO David Neithercut

Return on Equity (average, past 3 years)

0.5%

Cash / Debt

$56.1 million / $12.2 billion

Dividend Yield

2.8%

Competitors

Apartment Investment & Management Co. 
UDR 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 44% of the 257 members who have rated Equity Residential believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, DCUDFlyer, wrote that the Equity Residential bear case all boiled down to price:

I actually live in an EQR managed complex, and it's very nice ... no complaints. In fact, upon moving in the leasing agent informed me they were at 98% occupancy rate. Very good for such a larger complex. However ... the stock EQR is far from attractive at this point. PE>100? Dividend yielding below 3? I don't see enough growth opportunity here to justify an "Outperform" rating. While focusing on strong real estate markets with stable job growth sounds like the right thing, is there enough upside to choose this over the broad market? I just don't see it.

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