NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) and TPG RE Finance Trust (NYSE:TRTX – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, institutional ownership, analyst recommendations and risk.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for NexPoint Real Estate Finance and TPG RE Finance Trust, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NexPoint Real Estate Finance | 0 | 1 | 0 | 1 | 3.00 |
| TPG RE Finance Trust | 1 | 1 | 3 | 0 | 2.40 |
NexPoint Real Estate Finance currently has a consensus price target of $16.50, suggesting a potential upside of 27.02%. TPG RE Finance Trust has a consensus price target of $7.70, suggesting a potential upside of 1.99%. Given NexPoint Real Estate Finance’s stronger consensus rating and higher possible upside, research analysts plainly believe NexPoint Real Estate Finance is more favorable than TPG RE Finance Trust.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NexPoint Real Estate Finance | $68.36 million | 3.34 | $13.98 million | $0.65 | 19.98 |
| TPG RE Finance Trust | $122.07 million | 4.82 | -$116.63 million | ($1.69) | -4.47 |
NexPoint Real Estate Finance has higher earnings, but lower revenue than TPG RE Finance Trust. TPG RE Finance 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.
Profitability
This table compares NexPoint Real Estate Finance and TPG RE Finance Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NexPoint Real Estate Finance | 23.44% | 9.51% | 0.46% |
| TPG RE Finance Trust | -30.16% | -21.48% | -5.41% |
Institutional and Insider Ownership
67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. Comparatively, 57.1% of TPG RE Finance Trust shares are owned by institutional investors. 54.0% of NexPoint Real Estate Finance shares are owned by company insiders. Comparatively, 2.5% of TPG RE Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Dividends
NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 15.4%. TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 12.7%. NexPoint Real Estate Finance pays out 307.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG RE Finance Trust pays out -56.8% of its earnings in the form of a dividend.
Risk & Volatility
NexPoint Real Estate Finance has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500. Comparatively, TPG RE Finance Trust has a beta of 2.1, meaning that its stock price is 110% more volatile than the S&P 500.
Summary
NexPoint Real Estate Finance beats TPG RE Finance Trust on 12 of the 17 factors compared between the two stocks.
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.
About TPG RE Finance Trust
TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.
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