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Equity Residential (EQR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Equity Residential (EQR)

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Intrinsic Value (DCF)

Current$61.17
→
Intrinsic$118.35
+93%
$73.86$118.35$202.82
Market implies 5% growth for 5 years
DCF analysis suggests EQR could have 93% upside at 18% growth — verify assumptions match your view.
At $61, the market prices in only 5% growth — below historical 18%, suggesting low expectations.
Range: Bear $74 → Bull $203. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →14%16%18%20%
8%$148$163$178$194
10%$98$108$118$130
12%$70$78$85$94
14%$53$58$65$71

Bull Case

  • Bull case ($203) offers 232% upside at 22% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (5%) ≤ historical CAGR (18%)

Bear Case

  • Bear case ($74) with 15% growth, 12% discount rate
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5-Year FFO Projection

Year 1$2.37B
Year 2$2.80B
Year 3$3.30B
Year 4$3.90B
Year 5$4.61B
Terminal$67.86B

📐 Model Inputs

Growth Rate18.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$2.00BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is EQR stock undervalued or overvalued?
🟢 UNDERVALUED

EQR trades at $61.17 vs. our DCF-derived intrinsic value of $118.35, implying +90% upside. At a 10.0% WACC and 18.2% projected FCF growth, the market appears to be underpricing the present value of EQR's future cash flows. The bear case ($71.57) still suggests upside, providing margin of safety.

What is EQR's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.00B, projected at 18.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $8.36B net debt and dividing by 0.39B shares: Bear $71.57 | Base $118.35 | Bull $186.33. Current price $61.17 implies +90% to base case.

How is EQR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 18.2% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($54.61B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 27.3x.