Is Equity Residential overvalued or undervalued?

As of 3 February 2025, the valuation grade for Equity Residential has moved from attractive to fair, indicating a shift in its perceived value. The company appears to be fairly valued based on its current metrics, with a P/E ratio of 26, a Price to Book Value of 2.36, and an EV to EBITDA of 14.08. In comparison to peers, AvalonBay Communities, Inc. has a lower P/E ratio of 23.50, while VICI Properties, Inc. stands out with a very attractive valuation and a P/E of 12.89.
Despite the fair valuation, Equity Residential has underperformed relative to the S&P 500, with a year-to-date return of -9.60% compared to the index's 12.22%. This trend continues over multiple periods, as the company has a one-year return of -15.84% against the S&P 500's 17.14%. Overall, the metrics suggest that while the stock is fairly valued, its recent performance may raise concerns for potential investors.