As of June 14, 2025, Equity Residential's estimated intrinsic value ranges from $35.55 to $73.23 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $73.23 | +6.3% |
| Discounted Cash Flow (5Y) | $72.32 | +5.0% |
| Dividend Discount Model (Multi-Stage) | $59.51 | -13.6% |
| Dividend Discount Model (Stable) | $56.55 | -17.9% |
| Earnings Power Value | $35.55 | -48.4% |
Is Equity Residential (EQR) undervalued or overvalued?
With the current market price at $68.88, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Equity Residential's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.62 | 0.74 |
| Cost of equity | 6.7% | 9.0% |
| Cost of debt | 4.0% | 6.1% |
| Tax rate | 0.1% | 0.1% |
| Debt/Equity ratio | 0.31 | 0.31 |
| After-tax WACC | 6.1% | 8.3% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $72 | $35,286M | 82.4% |
| 10-Year Growth | $73 | $35,631M | 66.9% |
| 5-Year EBITDA | $96 | $44,469M | 86.1% |
| 10-Year EBITDA | $95 | $43,804M | 73.1% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,495M |
| Discount Rate (WACC) | 8.3% - 6.1% |
| Enterprise Value | $17,988M - $24,637M |
| Net Debt | $7,807M |
| Equity Value | $10,181M - $16,830M |
| Outstanding Shares | 380M |
| Fair Value | $27 - $44 |
| Selected Fair Value | $35.55 |
| Metric | Value |
|---|---|
| Market Capitalization | $26170M |
| Enterprise Value | $33977M |
| Trailing P/E | 26.26 |
| Forward P/E | 22.81 |
| Trailing EV/EBITDA | 17.10 |
| Current Dividend Yield | 392.01% |
| Dividend Growth Rate (5Y) | 3.59% |
| Debt-to-Equity Ratio | 0.31 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $21.97 |
| Discounted Cash Flow (5Y) | 25% | $18.08 |
| Dividend Discount Model (Multi-Stage) | 20% | $11.90 |
| Dividend Discount Model (Stable) | 15% | $8.48 |
| Earnings Power Value | 10% | $3.55 |
| Weighted Average | 100% | $63.99 |
Based on our comprehensive valuation analysis, Equity Residential's weighted average intrinsic value is $63.99, which is approximately 7.1% below the current market price of $68.88.
Key investment considerations:
Given these factors, we believe Equity Residential is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.