Essex Property Reaches New 52-Week High - Analyst Blog

Shares of Essex Property Trust Inc. ESS scaled a new 52-week high, touching $182.38 during the trading session on Jun 4. The closing price of $182.00 of this real estate investment trust (REIT) reflected a strong year-to-date return of over 25%. The trading volume for the session was nearly 0.4 million shares.

Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving operating environment and its long-term expected growth rate of 8.3%.

Growth Drivers

Essex Property accomplished the merger with BRE Properties on Apr 1, thereby creating a premium West Coast multifamily REIT. It was also added to the S&P 500 Index on the same day.

We believe that with a solid property base, significant geographic overlap and strong management team at Essex, this combined entity can efficiently leverage on the attractive market fundamentals, synergies and reward shareholders accordingly.

As a matter of fact, in the West Coast, strong growth in jobs amid a lower supply of properties in the market keeps the demand momentum robust. Alongside, Essex is well poised to benefit from this going forward.

Early in May, the company came up with encouraging results for first-quarter 2014. It reported funds from operations (FFO) of $2.02 per share, exceeding the Zacks Consensus Estimate of $2.00 by 1.0% as well as the year-ago quarter figure of $1.87 by 8.0%. Results were driven by improving market fundamentals along its footprints.

Over the last 7 days, though the Zacks Consensus Estimate for full-year 2014 moved down 0.4% to $7.37 per share, for full-year 2015 the estimates moved north 0.1% to $9.11.

Other Stocks to Consider

In addition to Essex Property, Avalonbay Communities Inc. AVB, Federal Realty Investment Trust FRT and Host Hotels & Resorts, Inc. HST also scaled 52-week highs on Jun 4.
 

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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