Broadstone Net Lease (NYSE:BNL) vs. Equity Residential (NYSE:EQR) Critical Comparison

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

Institutional and Insider Ownership

92.7% of Equity Residential shares are held by institutional investors. Comparatively, 89.1% of Broadstone Net Lease shares are held by institutional investors. 1.1% of Equity Residential shares are held by company insiders. Comparatively, 0.6% of Broadstone Net Lease shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Equity Residential and Broadstone Net Lease, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equity Residential	0	12	7	0	2.37
Broadstone Net Lease	0	3	9	0	2.75

Equity Residential presently has a consensus price target of $70.02, indicating a potential upside of 14.52%. Broadstone Net Lease has a consensus price target of $19.91, indicating a potential upside of 7.50%. Given Equity Residential’s higher possible upside, research analysts plainly believe Equity Residential is more favorable than Broadstone Net Lease.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Equity Residential	37.58%	10.30%	5.54%
Broadstone Net Lease	20.04%	2.93%	1.69%

Risk & Volatility

Equity Residential has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Broadstone Net Lease has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.

Valuation and Earnings

This table compares Equity Residential and Broadstone Net Lease”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equity Residential	$2.98 billion	7.81	$1.04 billion	$3.03	20.18
Broadstone Net Lease	$431.80 million	8.12	$162.44 million	$0.47	39.40

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

Dividends

Equity Residential pays an annual dividend of $2.77 per share and has a dividend yield of 4.5%. Broadstone Net Lease pays an annual dividend of $1.16 per share and has a dividend yield of 6.3%. Equity Residential pays out 91.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadstone Net Lease pays out 246.8% 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 has increased its dividend for 4 consecutive years and Broadstone Net Lease has increased its dividend for 4 consecutive years.

Summary

Equity Residential beats Broadstone Net Lease on 10 of the 16 factors compared between the two stocks.

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 305 properties consisting of 80,683 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin.

About Broadstone Net Lease

Broadstone Net Lease, Inc. (the Corporation) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (REIT) commencing with the taxable year ended December 31, 2008. Broadstone Net Lease, LLC (the Corporation’s operating company, or the OP), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as OP Units or non-controlling interests. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust (UPREIT). The Corporation’s common stock is listed on the New York Stock Exchange under the symbol BNL.