Ready Capital (NYSE:RC – Get Free Report) and NexPoint Real Estate Finance (NYSE:NREF – 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 earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.
Dividends
Ready Capital pays an annual dividend of $0.04 per share and has a dividend yield of 1.9%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 14.3%. Ready Capital pays out -2.1% of its earnings in the form of a dividend. NexPoint Real Estate Finance pays out 71.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Analyst Recommendations
This is a summary of current ratings for Ready Capital and NexPoint Real Estate Finance, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ready Capital | 2 | 6 | 0 | 0 | 1.75 |
| NexPoint Real Estate Finance | 0 | 4 | 0 | 0 | 2.00 |
Institutional & Insider Ownership
55.9% of Ready Capital shares are owned by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. 1.1% of Ready Capital shares are owned by company insiders. Comparatively, 54.0% of NexPoint Real Estate Finance shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Risk and Volatility
Ready Capital has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.
Profitability
This table compares Ready Capital and NexPoint Real Estate Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ready Capital | -47.30% | -7.02% | -1.36% |
| NexPoint Real Estate Finance | 102.28% | 17.52% | 1.14% |
Valuation & Earnings
This table compares Ready Capital and NexPoint Real Estate Finance”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ready Capital | $896.97 million | 0.38 | -$435.76 million | ($1.91) | -1.09 |
| NexPoint Real Estate Finance | $72.51 million | 3.43 | $29.19 million | $2.81 | 4.99 |
NexPoint Real Estate Finance has lower revenue, but higher earnings than Ready Capital. Ready Capital 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.
Summary
NexPoint Real Estate Finance beats Ready Capital on 11 of the 15 factors compared between the two stocks.
About Ready Capital
Ready Capital Corporation operates as a real estate finance company in the United States. It operates through two segments: LMM Commercial Real Estate and Small Business Lending. The company originates, acquires, finances, and services lower-to-middle-market (LLM) commercial real estate loans, small business administration (SBA) loans, residential mortgage loans, construction loans, and mortgage-backed securities collateralized primarily by LLM loans, or other real estate-related investments. The LMM Commercial Real Estate segment originates LLM loans across the full life-cycle of an LLM property, including construction, bridge, stabilized, and agency loan origination channels. The Small Business Lending segment acquires, originates, and services owner-occupied loans guaranteed by the SBA under its SBA Section 7(a) Program; and acquires purchased future receivables. 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. The company was formerly known as Sutherland Asset Management Corporation and changed its name to Ready Capital Corporation in September 2018. Ready Capital Corporation was founded in 2007 and is headquartered in New York, New York.
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.
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