Is Equity Residential overvalued or undervalued?

As of 12 February 2025, Equity Residential's valuation grade has moved from fair to expensive, indicating that the company is currently overvalued. The P/E ratio stands at 26, while the industry average is significantly higher with peers like Welltower, Inc. at a P/E of 81.67 and Equinix, Inc. at 68.70. Additionally, the EV to EBITDA ratio is 14.08, which is relatively high compared to Realty Income Corp. at 10.64, suggesting that Equity Residential's valuation is not justified by its earnings potential.
The company's PEG ratio is also concerning at 3.12, indicating that its growth prospects may not be sufficient to support its current price. With a dividend yield of 395.76% and ROE at 9.02%, these figures do not compensate for the high valuation ratios. Overall, Equity Residential appears to be overvalued in comparison to its peers and the broader market, as evidenced by its recent stock performance lagging behind the S&P 500 over various time frames.