Comparing NexPoint Real Estate Finance (NYSE:NREF) & Granite Point Mortgage Trust (NYSE:GPMT)

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

Dividends

NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 15.2%. Granite Point Mortgage Trust pays an annual dividend of $0.20 per share and has a dividend yield of 13.4%. NexPoint Real Estate Finance pays out 69.0% of its earnings in the form of a dividend. Granite Point Mortgage Trust pays out -17.2% 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.

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, Granite Point Mortgage Trust has a beta of 1.72, meaning that its share price is 72% more volatile than the S&P 500.

Profitability

This table compares NexPoint Real Estate Finance and Granite Point Mortgage Trust’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%
Granite Point Mortgage Trust	-31.24%	-15.52%	-4.80%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for NexPoint Real Estate Finance and Granite Point Mortgage Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NexPoint Real Estate Finance	1	3	0	0	1.75
Granite Point Mortgage Trust	1	2	1	0	2.00

NexPoint Real Estate Finance presently has a consensus target price of $14.50, indicating a potential upside of 10.10%. Granite Point Mortgage Trust has a consensus target price of $2.68, indicating a potential upside of 79.49%. Given Granite Point Mortgage Trust’s stronger consensus rating and higher probable upside, analysts clearly believe Granite Point Mortgage Trust is more favorable than NexPoint Real Estate Finance.

Valuation and Earnings

This table compares NexPoint Real Estate Finance and Granite Point Mortgage Trust”s revenue, earnings per share (EPS) 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
Granite Point Mortgage Trust	$131.73 million	0.54	-$41.15 million	($1.16)	-1.29

NexPoint Real Estate Finance has higher earnings, but lower revenue than Granite Point Mortgage Trust. Granite Point Mortgage 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.

Insider & Institutional Ownership

67.8% of NexPoint Real Estate Finance shares are held by institutional investors. Comparatively, 51.6% of Granite Point Mortgage Trust shares are held by institutional investors. 54.0% of NexPoint Real Estate Finance shares are held by insiders. Comparatively, 3.1% of Granite Point Mortgage Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

NexPoint Real Estate Finance beats Granite Point Mortgage Trust on 10 of the 16 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 Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., a real estate investment trust, originates, invests in, and manages senior floating-rate commercial mortgage loans, and other debt and debt-like commercial real estate investments in the United States. The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations, and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning, and repurposing of the commercial property. 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. The company was founded in 2015 and is headquartered in New York, New York.