Reviewing NexPoint Real Estate Finance (NYSE:NREF) and Sunrise Realty Trust (NASDAQ:SUNS)

Sunrise Realty Trust (NASDAQ:SUNS) and NexPoint Real Estate Finance (NYSE:NREF) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

Analyst Ratings

This is a summary of current ratings and recommmendations for Sunrise Realty Trust and NexPoint Real Estate Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sunrise Realty Trust	1	3	0	0	1.75
NexPoint Real Estate Finance	0	4	0	0	2.00

Sunrise Realty Trust currently has a consensus price target of $8.00, indicating a potential upside of 34.68%. NexPoint Real Estate Finance has a consensus price target of $16.75, indicating a potential upside of 7.72%. Given Sunrise Realty Trust’s higher possible upside, equities analysts clearly believe Sunrise Realty Trust is more favorable than NexPoint Real Estate Finance.

Dividends

Sunrise Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 20.2%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 12.9%. Sunrise Realty Trust pays out 123.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NexPoint Real Estate Finance pays out 84.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

67.8% of NexPoint Real Estate Finance shares are held by institutional investors. 28.5% of Sunrise Realty Trust shares are held by insiders. Comparatively, 59.9% of NexPoint Real Estate Finance shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Sunrise Realty Trust and NexPoint Real Estate Finance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sunrise Realty Trust	$21.57 million	3.72	$12.14 million	$0.97	6.12
NexPoint Real Estate Finance	$89.95 million	3.26	$105.10 million	$2.37	6.56

NexPoint Real Estate Finance has higher revenue and earnings than Sunrise Realty Trust. Sunrise Realty Trust is trading at a lower price-to-earnings ratio than NexPoint Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Sunrise Realty Trust has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Profitability

This table compares Sunrise Realty Trust and NexPoint Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sunrise Realty Trust	53.33%	8.25%	4.90%
NexPoint Real Estate Finance	107.93%	12.72%	0.92%

Summary

NexPoint Real Estate Finance beats Sunrise Realty Trust on 11 of the 15 factors compared between the two stocks.

About Sunrise Realty Trust

Sunrise Realty Trust, Inc. engages in commercial real estate (CRE) lending business. It focuses on originating CRE debt investments and providing capital to borrowers and sponsors with transitional business plans collateralized by CRE assets. The company intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, whole loans, B-notes, CMBS, and debt-like preferred equity securities across CRE asset classes. Sunrise Realty Trust, Inc. was incorporated in 2023 and is based in West Palm Beach, Florida.

About NexPoint Real Estate Finance

NexPoint Real Estate Finance, Inc. operates as a commercial mortgage real estate investment trust in the United States. It focuses on originating, structuring, and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, and common equity investments, as well as multifamily and single-family rental commercial mortgage-backed securities securitizations, multifamily structured credit risk notes, and mortgage-backed securities or target assets. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. NexPoint Real Estate Finance, Inc. was incorporated in 2019 and is based in Dallas, Texas.