Essex Property Trust (NYSE:ESS) versus Granite Point Mortgage Trust (NYSE:GPMT) Critical Review

Essex Property Trust (NYSE:ESS) and Granite Point Mortgage Trust (NYSE:GPMT) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Risk & Volatility

Essex Property Trust has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Granite Point Mortgage Trust has a beta of 1.83, indicating that its share price is 83% more volatile than the S&P 500.

Insider and Institutional Ownership

96.5% of Essex Property Trust shares are held by institutional investors. Comparatively, 51.6% of Granite Point Mortgage Trust shares are held by institutional investors. 3.9% of Essex Property Trust shares are held by company insiders. Comparatively, 2.3% of Granite Point Mortgage Trust 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 Ratings

This is a summary of current recommendations and price targets for Essex Property Trust and Granite Point Mortgage Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Essex Property Trust	1	12	6	0	2.26
Granite Point Mortgage Trust	0	2	2	0	2.50

Essex Property Trust currently has a consensus target price of $302.11, indicating a potential upside of 5.34%. Granite Point Mortgage Trust has a consensus target price of $4.58, indicating a potential upside of 54.32%. Given Granite Point Mortgage Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Granite Point Mortgage Trust is more favorable than Essex Property Trust.

Earnings & Valuation

This table compares Essex Property Trust and Granite Point Mortgage Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Essex Property Trust	$1.74 billion	10.58	$405.83 million	$8.56	33.50
Granite Point Mortgage Trust	$47.59 million	3.12	-$63.20 million	($3.86)	-0.77

Essex Property Trust has higher revenue and earnings than Granite Point Mortgage Trust. Granite Point Mortgage 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.

Dividends

Essex Property Trust pays an annual dividend of $9.80 per share and has a dividend yield of 3.4%. Granite Point Mortgage Trust pays an annual dividend of $0.20 per share and has a dividend yield of 6.7%. Essex Property Trust pays out 114.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Granite Point Mortgage Trust pays out -5.2% of its earnings in the form of a dividend. Essex Property Trust has raised its dividend for 30 consecutive years. Granite Point Mortgage Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Essex Property Trust and Granite Point Mortgage Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Essex Property Trust	31.55%	9.72%	4.36%
Granite Point Mortgage Trust	-87.21%	0.95%	0.27%

Summary

Essex Property Trust beats Granite Point Mortgage Trust on 12 of the 17 factors compared between the two stocks.

About Essex Property Trust

Essex 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 252 apartment communities comprising approximately 62,000 apartment homes with an additional property in active development.

About Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., a real estate investment trust, originates, invests in, and manages senior floating-rate commercial mortgage loans, and other debt and debt-like commercial real estate investments in the United States. The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations, and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning, and repurposing of the commercial property. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2015 and is headquartered in New York, New York.