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

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

Analyst Ratings

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

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

Risk & Volatility

NexPoint Real Estate Finance has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Granite Point Mortgage Trust has a beta of 1.72, indicating that its stock 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%

Earnings & Valuation

This table compares NexPoint Real Estate Finance and Granite Point Mortgage Trust”s 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
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.

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.

Insider & Institutional Ownership

67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. Comparatively, 51.6% of Granite Point Mortgage Trust shares are owned by institutional investors. 54.0% of NexPoint Real Estate Finance shares are owned by company insiders. Comparatively, 3.1% of Granite Point Mortgage Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

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.