Analyzing NexPoint Residential Trust (NXRT) and Its Peers

NexPoint Residential Trust (NYSE:NXRT) is one of 57 publicly-traded companies in the “Residential REITs” industry, but how does it weigh in compared to its peers? We will compare NexPoint Residential Trust to similar businesses based on the strength of its earnings, risk, analyst recommendations, valuation, institutional ownership, profitability and dividends.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for NexPoint Residential Trust and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NexPoint Residential Trust	3	3	0	0	1.50
NexPoint Residential Trust Competitors	619	3260	3375	147	2.41

NexPoint Residential Trust currently has a consensus target price of $20.50, indicating a potential upside of 16.86%. As a group, “Residential REITs” companies have a potential upside of 10.84%. Given NexPoint Residential Trust’s higher probable upside, analysts clearly believe NexPoint Residential Trust is more favorable than its peers.

Earnings & Valuation

This table compares NexPoint Residential Trust and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
NexPoint Residential Trust	$251.28 million	-$32.03 million	-13.19
NexPoint Residential Trust Competitors	$774.66 million	$238.42 million	37.99

NexPoint Residential Trust’s peers have higher revenue and earnings than NexPoint Residential Trust. NexPoint Residential Trust is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares NexPoint Residential Trust and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NexPoint Residential Trust	-13.22%	-11.75%	-1.79%
NexPoint Residential Trust Competitors	9.87%	2.47%	2.34%

Institutional and Insider Ownership

76.6% of NexPoint Residential Trust shares are held by institutional investors. Comparatively, 55.7% of shares of all “Residential REITs” companies are held by institutional investors. 16.6% of NexPoint Residential Trust shares are held by insiders. Comparatively, 8.5% of shares of all “Residential REITs” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

NexPoint Residential Trust pays an annual dividend of $2.12 per share and has a dividend yield of 12.1%. NexPoint Residential Trust pays out -159.4% of its earnings in the form of a dividend. As a group, “Residential REITs” companies pay a dividend yield of 4.6% and pay out 248.1% of their earnings in the form of a dividend. NexPoint Residential Trust has raised its dividend for 3 consecutive years. NexPoint Residential Trust is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Volatility and Risk

NexPoint Residential Trust has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, NexPoint Residential Trust’s peers have a beta of 0.68, suggesting that their average stock price is 32% less volatile than the S&P 500.

Summary

NexPoint Residential Trust peers beat NexPoint Residential Trust on 9 of the 15 factors compared.

About NexPoint Residential Trust

NexPoint Residential Trust is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol “NXRT,” primarily focused on acquiring, owning and operating well-located middle-income multifamily properties with “value-add” potential in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. NXRT is externally advised by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor, which has extensive real estate experience.