Value
4.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 4.7 |
| EV/EBITDA | 1.3 |
| p ocf | 6.8 |
| Analyst target | 4.0 |
- ▸P/OCF: 15.8x (FFO proxy — REITs gated off P/E)
EQR · Why this verdict
Why Equity Residential (EQR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Equity Residential generates free cash flow at 149% of net income with 31% operating margins, and earnings estimates are trending upward, but three consecutive earnings misses averaging more than 11% below consensus — and a stock price that has exceeded the analyst consensus target — leave the current setup with negative expected return and a deteriorating delivery record.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is trading above the analyst consensus price target, meaning consensus expects the price to decline from current levels, and the reward-to-risk is unfavorable — available upside to target is negative while downside risk is several times larger. Price targets | Analyst consensus price targets are revised upward above $73 (more than 10% above the current price of $66.18) within 2 quarters, restoring positive headroom to target. | →Stable |
| CounterEarnings estimates are trending upward, which could prompt analysts to raise their targets — if those revisions materialize soon enough, the currently unfavorable geometry may normalize. | ||
The company has missed earnings estimates in three consecutive quarters — by 20%, 25%, and 11%, reading most recent to oldest — with an average negative surprise exceeding 11%, indicating the business is consistently falling well short of what investors had modeled. Earnings | EPS surprise turns positive above 0% for at least 2 consecutive quarters, signaling a credible reset in the delivery track record. | →Stable |
| CounterThe oldest quarter in the four-quarter window — a 13% positive surprise beat — demonstrates the business is capable of delivering above expectations; reset analyst estimates could restore a beat pattern if the miss streak reflects a transitional period. | ||
Free cash flow converts at 149% of net income with 31% operating margins and a Piotroski F-Score of 7 out of 9, indicating the core real estate operations generate more cash than the income statement alone reflects — a structural quality trait that persists even during periods of earnings pressure. Quality | Free cash flow remains above 120% of net income and operating margins stay above 28% over the next four quarters. | →Stable |
| CounterAn elevated dividend payout flagged at 425% of the sustainable level creates a financing risk that could pressure free cash flow if capital markets tighten or operating income deteriorates further. | ||
Despite a three-quarter miss streak, analysts have been revising earnings estimates upward — a signal that the forward earnings outlook may be more constructive than the recent delivery record implies, and that the bar may already be reset lower. Bull case | The upward estimate revision trend continues and is confirmed by at least one positive earnings surprise above 3% within the next 2 quarters. | →Stable |
| CounterRising estimates alongside a persistent miss streak is a precarious combination: if the business continues to miss against now-higher estimates, the earnings surprise penalty could be larger than what the past three misses have inflicted. | ||
The stock is trading above the analyst consensus price target, meaning consensus expects the price to decline from current levels, and the reward-to-risk is unfavorable — available upside to target is negative while downside risk is several times larger.
→StablePrice targets
- Expectation
- Analyst consensus price targets are revised upward above $73 (more than 10% above the current price of $66.18) within 2 quarters, restoring positive headroom to target.
CounterEarnings estimates are trending upward, which could prompt analysts to raise their targets — if those revisions materialize soon enough, the currently unfavorable geometry may normalize.
The company has missed earnings estimates in three consecutive quarters — by 20%, 25%, and 11%, reading most recent to oldest — with an average negative surprise exceeding 11%, indicating the business is consistently falling well short of what investors had modeled.
→StableEarnings
- Expectation
- EPS surprise turns positive above 0% for at least 2 consecutive quarters, signaling a credible reset in the delivery track record.
CounterThe oldest quarter in the four-quarter window — a 13% positive surprise beat — demonstrates the business is capable of delivering above expectations; reset analyst estimates could restore a beat pattern if the miss streak reflects a transitional period.
Free cash flow converts at 149% of net income with 31% operating margins and a Piotroski F-Score of 7 out of 9, indicating the core real estate operations generate more cash than the income statement alone reflects — a structural quality trait that persists even during periods of earnings pressure.
→StableQuality
- Expectation
- Free cash flow remains above 120% of net income and operating margins stay above 28% over the next four quarters.
CounterAn elevated dividend payout flagged at 425% of the sustainable level creates a financing risk that could pressure free cash flow if capital markets tighten or operating income deteriorates further.
Despite a three-quarter miss streak, analysts have been revising earnings estimates upward — a signal that the forward earnings outlook may be more constructive than the recent delivery record implies, and that the bar may already be reset lower.
→StableBull case
- Expectation
- The upward estimate revision trend continues and is confirmed by at least one positive earnings surprise above 3% within the next 2 quarters.
CounterRising estimates alongside a persistent miss streak is a precarious combination: if the business continues to miss against now-higher estimates, the earnings surprise penalty could be larger than what the past three misses have inflicted.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.9 |
| ROA | 1.8 |
| Gross margin | 8.6 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 0.5 |
| FCF quality | 10.0 |
| Moat | 6.0 |
| Piotroski F | 7.8 |
- ▸Strong margins: 31%
- ▸Excellent cash conversion: 149% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
1.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.1 |
| EPS growth | 0.0 |
Momentum
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.9 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 6.0 |
| erm sentiment | 5.9 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 6.9 |
| growth rank | 4.4 |
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.8 |
| support resistance | 3.9 |
| 52w position | 9.4 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.4 |
| days to cover | 7.4 |
| volatility | 7.4 |
| put call | 0.0 |
| implied vol | 7.4 |
| beta | 8.4 |
| debt equity | 6.3 |
- ▸Elevated put/call: 15.11
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 424.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.1>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.8=NEGATIVE
Warning (2)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.75
Upside
-3.8%
Downside
5.0%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 45 mid-range, Bollinger mid-band
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.8=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.75 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.5, Risk (lower is worse) at 6.5, and Quality at 6.4; the weakest are Growth at 1.6, Catalyst at 3.3, and Value at 4.1. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.75 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The stock is trading above the analyst consensus price target, meaning consensus expects the price to decline from current levels, and the reward-to-risk is unfavorable — available upside to target is negative while downside risk is several times larger.
Trip ifConsensus analyst price target rises above $73 (more than 10% above the current price of $66.18) within 2 quarters.
- P2The company has missed earnings estimates in three consecutive quarters — by 20%, 25%, and 11%, reading most recent to oldest — with an average negative surprise exceeding 11%, indicating the business is consistently falling well short of what investors had modeled.
Trip ifEPS surprise exceeds 5% for 2 consecutive quarters.
- P3Free cash flow converts at 149% of net income with 31% operating margins and a Piotroski F-Score of 7 out of 9, indicating the core real estate operations generate more cash than the income statement alone reflects — a structural quality trait that persists even during periods of earnings pressure.
Trip ifFree cash flow falls below 100% of net income for 2 consecutive quarters.
- P4Despite a three-quarter miss streak, analysts have been revising earnings estimates upward — a signal that the forward earnings outlook may be more constructive than the recent delivery record implies, and that the bar may already be reset lower.
Trip ifConsensus EPS estimates decline by more than 5% in 2 consecutive quarters, reversing the upward revision trend.