NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) and Cherry Hill Mortgage Investment (NYSE:CHMI – Get Free Report) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.
Profitability
This table compares NexPoint Real Estate Finance and Cherry Hill Mortgage Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NexPoint Real Estate Finance | 122.60% | 15.63% | 1.04% |
| Cherry Hill Mortgage Investment | 7.28% | 16.21% | 1.38% |
Dividends
NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 15.2%. Cherry Hill Mortgage Investment pays an annual dividend of $0.40 per share and has a dividend yield of 14.4%. NexPoint Real Estate Finance pays out 69.0% of its earnings in the form of a dividend. Cherry Hill Mortgage Investment pays out -307.7% 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. Cherry Hill Mortgage Investment has raised its dividend for 1 consecutive years.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NexPoint Real Estate Finance | 1 | 3 | 0 | 0 | 1.75 |
| Cherry Hill Mortgage Investment | 1 | 1 | 2 | 0 | 2.25 |
NexPoint Real Estate Finance presently has a consensus price target of $14.50, indicating a potential upside of 10.18%. Cherry Hill Mortgage Investment has a consensus price target of $3.00, indicating a potential upside of 8.11%. Given NexPoint Real Estate Finance’s higher possible upside, equities research analysts clearly believe NexPoint Real Estate Finance is more favorable than Cherry Hill Mortgage Investment.
Risk and Volatility
NexPoint Real Estate Finance has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, Cherry Hill Mortgage Investment has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.
Institutional & Insider Ownership
67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. Comparatively, 18.5% of Cherry Hill Mortgage Investment shares are owned by institutional investors. 54.0% of NexPoint Real Estate Finance shares are owned by company insiders. Comparatively, 1.5% of Cherry Hill Mortgage Investment 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.
Earnings and Valuation
This table compares NexPoint Real Estate Finance and Cherry Hill Mortgage Investment”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NexPoint Real Estate Finance | $89.95 million | 2.59 | $110.28 million | $2.90 | 4.54 |
| Cherry Hill Mortgage Investment | $61.10 million | 1.67 | $6.83 million | ($0.13) | -21.35 |
NexPoint Real Estate Finance has higher revenue and earnings than Cherry Hill Mortgage Investment. Cherry Hill Mortgage Investment 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 Cherry Hill Mortgage Investment on 11 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 Cherry Hill Mortgage Investment
Cherry Hill Mortgage Investment Corporation, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States. It operates through Investments in RMBS (residential mortgage-backed securities) and Investments in Servicing Related Assets segments. Cherry Hill Mortgage Investment Corporation qualifies as a real estate investment trust for federal income tax purposes. The company generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Cherry Hill Mortgage Investment Corporation was incorporated in 2012 and is based in Farmingdale, New Jersey.
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